The 24-year-old has scored seven times in his last four appearances for the Foxes, and was named Premier League player of the month for March.
He has made 117 appearances, scoring 32 goals in total, since moving to Leicester from Manchester City on a five-year contract in 2017.
"I can't express how I'm feeling," said Nigeria international Iheanacho.
"I'm excited, I'm satisfied, I'm beaten! It's a extraordinary moment and I'm satisfied that Leicester City gave me a brand new contract.
"It's been a exquisite time right here. It's not been easy, but there's plenty of humans right here which can be suitable humans, high-quality human beings to paintings with. They are excellent humans and they make me experience snug and welcome considering that I came in.
"It's been virtually high-quality being right here. It's like a own family. I'm happy being right here and hopefully I can live right here many more years."
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