The Portuguese defender marked his 29th birthday today by signing the new deal.
Carvalho joined Chelsea from Porto for £19.85million three years ago.
Chief executive Peter Kenyon said: “We are delighted that Riccy has committed himself to us for the next five years.
“He has been a key player for us since he joined and has been in fantastic form this season. Without doubt he is one of the best central defenders in the world.
“The only shame is that he will miss tomorrow’s game through injury and we are all sorry for that.”
Carvalho has been linked with a move to Real Madrid in recent months.