The striker enjoyed a fantastic first season in England in which he bagged 15 goals, catching the attention of bigger teams in the Premier League and abroad.
However, the Nigerian has chosen to remain at The Hawthorns as the club look to build on last year’s mid-table finish.
Odemwingie expressed his delight at his new deal on his Twitter page, saying: “Signed my new contract with WBA for 3 years! Very happy! The atmosphere in this club is very positive and I surely will improve more!”
The striker’s thoughts were echoed by manager Roy Hodgson, who is looking forward to seeing him back in goalscoring action.
He told the club’s official website: "I'm obviously very pleased that Peter has pledged his future to West Bromwich Albion.
"I always believed this would be the case and I am grateful to both him and the club for reaching an agreement.
"We can now look forward to benefiting once again from Peter's goalscoring prowess and seeing him play an important part in our campaign to stay in the Premier League for a second successive season."
Sporting and technical director Dan Ashworth added: "It has been well documented that Peter still had two years left on his previous deal but off the back of his achievements last season, the club wanted to reward him with an improved, longer-term contract.
"We have obviously been involved in lengthy discussions with Peter over the summer and I am delighted that they have come to a successful conclusion.
"From the outset, both parties wanted this to happen but, as with any contract, there are always one or two issues to be ironed out.
"Peter can now fully focus on showing everyone what a key player he is for West Bromwich Albion and contributing to what we hope will be another successful season."
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