Ampadu signed from Exeter in July 2017 with the fee of up to £2.5million agreed by tribunal in April.
The defender or midfielder, who turned 18 last week, has impressed since moving to Stamford Bridge.
"I'm really proud and happy, I'm looking forward to the next five years," he said.
Ampadu has made seven Chelsea appearances to date and is certain to get further opportunities this season under Maurizio Sarri.
The Welshman could be involved in Thursday's Europa League clash at PAOK in Greece.
"All I have got to do now is continue to work hard, and hopefully good things will happen," Ampadu added.
Chelsea director Marina Granovskaia said: "Ethan has shown great potential and unbelievable maturity since arriving at Chelsea a year ago.
"In this short time he convinced a lot of people with his exceptional quality and mentality and we look forward to watching him develop into a key player for the club over the coming years."
Ampadu made his debut aged 17 years and six days in the Carabao Cup win over Nottingham Forest and became the first player born this millennium to start for Chelsea in the next round against Everton.
Ethan Ampadu has signed a new deal with Chelsea (Getty)
Ampadu recently earned the praise of Wales boss Ryan Giggs, the Manchester United great, who predicted the teenager would become a "magnificent player".