The winger has been linked with a switch to Manchester United with Jose Mourinho keen to work with him again.
PSG have also been sniffing around but he has now committed himself to Chelsea.
Willian was Chelse’a best player in a season of turmoil at Stamford Bridge last term.
And Antonio Conte will be looking to the Brazil star to take them on next season.
Willian said: “I’m very happy to sign a new contract with Chelsea. It’s a dream to continue with this club and over the next four years I will try to help the team win more trophies.
“It’s been an amazing time for me since I joined the club three years ago, I’ve won titles and last season I was named Chelsea Player of the Year.
“I hope to be able to stay at that level during the coming seasons and achieve more success.”
Chelsea paid £30m for Willian, when the pinched him from under Tottenham’s nose, to Russian side Anzhi Makhachkala three years ago.
He was as named by UEFA as one of the top XI players of the Champions League group stage and voted Chelsea’s Fans’ Player of the Year and Players’ Player of the Year.
His new contract looks to have stemmed from new boss Antonio Conte – who will be unveiled as a media conference at 2pm Thursday at Stamford Bridge – recognising what an important asset Willian is to the club.
While on duty with Brazil in the Copa America, Willian declined to dismiss linking up again with Mourinho, saying only: “That is something my agent deals with.”
Now Mourinho has seen his hopes dashed with the Chelsea No.22 committing himself to the west Londoners.
Technical director Michael Emenalo added: “We are very pleased to agree a new long-term deal with Willian, who has proved himself to be an important player for the team since he arrived here.
“We are looking forward to seeing his continued impact as we begin an exciting new campaign under first-team head coach Antonio Conte.”