The Brazil international, who had two years remaining on his current deal, scored 13 goals in 59 games for the Blues last season.
Willian, 27, joined from Russian side Anzhi Makhachkala for a reported £30m in 2013.
"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," he said.
Willian, who has scored 19 goals in 140 matches for Chelsea, was named player of the year last season as the club finished 10th in the Premier League.
He has won 30 caps for Brazil since making his debut in 2011, scoring six goals.
Last week, Chelsea signed Belgium striker Michy Batshuayi from Marseille for a fee believed to be worth £33m, their first capture under new manager Antonio Conte.
Chelsea midfielder Willian has signed a new four-year contract with the club.