The 25-year-old moved to the Red Rose from Somerset in 2013 and his new deal ties him to the club until 2019.
Short-format specialist Buttler has scored England's three fastest ODI centuries, including a 46-ball ton against Pakistan last year.
"Jos is one of the most talented cricketers in the game," said cricket director and head coach Ashley Giles.
"His presence in last year's T20 Blast final at Edgbaston was a factor in us winning the competition.
"Jos is a great guy to have in the dressing room too and his experience at international level really benefits the squad."
Buttler, who has been playing in the Indian Premier League with Mumbai Indians, will return to Lancashire for Friday's T20 Blast home game against Durham.
England wicketkeeper Jos Buttler has signed a new three-year contract with Lancashire.