The Czech Republic international missed two months with an ankle injury early last term but he returned to end with two goals in 25 league appearances as Hertha finished sixth in the Bundesliga.
The 26-year-old is now set to remain in Berlin until at least 2019 and he can look forward to testing himself in the Europa League group stages from September.
“The talks went very well because all parties had one goal,” Darida said on Friday.
“I’ve had two enjoyable years here so far and have developed both as a footballer and as a person. Now I’m looking forward to the next challenges with Hertha BSC.”
Darida joined Hertha in 2015 after spending two years with Freiburg and he played 35 games in all competitions in his first season – scoring five goals and making seven more.
Watch: Darida scores Hertha's opening goal of 2016/17 against Freiburg
The hard-running central midfielder, who has earned 45 caps at international level, made 30 appearances for the club last season.
“Vladi is an incredibly important player for us,” Hertha sporting director Michael Preetz said.