The 25-year-old lock progressed through the Pro12 club's academy system.
"It's my home region, where I've grown up, and it's an honour to be able to sign up for three more years," said the former Wales Under-20 international.
Ospreys head coach Steve Tandy said: "He doesn't get the credit he deserves outside of our environment, but he's consistent, he's diligent."
Lloyd Ashley has committed himself to Ospreys until 2019 by signing a three-year contract extension.