The midfielder who has been with the Saints since the age of eight, agreed the deal which will take his stay at the club past two decades,
It comes after the Southampton captain played every single minute of the last Premier League season.
"It is not only his story of being developed as a player here, but also the commitment and attitude he shows in his work.
"He was not playing so much when I arrived, but he has listened and worked on every aspect of his game, and that is why he has reached the level he is now at."
Ward-Prowse added: "I started out here as an eight-year-old and just had that goal of wanting to reach the first-team, and my appreciation for the club is so big, because the people within it and the infrastructure has allowed me to follow my dream as a young boy who wanted to play professional football.
"They've given me every opportunity and every helping hand along the way to reach that target and for me again it's another opportunity to repay that faith to everybody who's played a part in my journey up until now.
"Not just within the team, but the club, I really feel that it's an exciting period for us. I think we've regained our identity as a team and I think we're heading in the right direction towards where we believe we can go as a club."