The young defender is a graduate from Everton's academy.
"I'm very proud to have got this contract," Pennington told evertonfc.com. "Starting off at 11 years old, I've come all this way to 18 now and I'm only just at the start of my career. It's great that I can have a chance to kick on and I think that's the idea of this contract.
"Now I have got to prove myself as a player in the real world. Hopefully I can make a career in the game and push on."