The midfielder, 29, has committed to the club at least until the summer of 2018, at which point an option exists for a further 12 months. His previous contract was due to expire at the season's end.
"It's brilliant for me to extend my contract, especially at a time when the club are bringing in some top players," Gardner, who has scored six goals in 81 appearances for the club since arriving from Sunderland in 2014, told West Brom's official website.
"This is a great family club and the lads are brilliant to play with.