The 25 year old has impressed as Burnley have let in just 19 league goals this season, the fourth-lowest in the Premier League.
"We felt it appropriate to offer a new deal on two levels," said Dyche. "He's done well in the Premier League and his contract was out of sync."
Dyche added: "We think it's appropriate to have all our players in a similar band.
"We felt that's worked well with the squad so they all know where they are at."
"It's been a good season so far and it's nice to be rewarded by the gaffer and the club in this way," said Tarkowski.
"I have said it for a long time this is a long-term project for me and the club so hopefully we can all continue what's been a positive season so far."