The 20-year-old has played 33 times in all competitions this term as the Hoops wrapped up a seventh consecutive Ladbrokes Premiership title.
Despite starting the campaign as fourth in the pecking order, Ajer has emerged as the first-choice centre-back at the club.
His previous contract was due to expire in 2020 and Celtic have decided to reward his good form with an additional two years, keeping him in Glasgow’s East End until 2022.
Ajer arrived at Celtic in 2016 from Start in his native Norway, where he had become the youngest ever captain in the country’s top flight, leading the team at the tender age of 16.
Originally an attacking midfielder, Celtic quickly went about moulding him into a centre-back and sent him out on loan to Kilmarnock for the second half of last season.
Manager Brendan Rodgers said of him in April: “When I first came to Celtic, Kris was a midfielder and I thought his best position would be centre half.
“Maybe in Norway, he could play midfield, but I think he has big possibilities at centre half. I knew he wasn’t going to get the games there for me at first, so we loaned him to Kilmarnock to get that positional experience.
“But it was more so that he had to head the ball, because I knew he would be under pressure at Kilmarnock. That’s important if he’s going to do well in the British game.
“He did well there, came back to us and looked as if he’d developed as a man. Then it was just about timing - when to put him in.
“He did well in some of the Champions League qualifiers but still needed more time to develop. Now he’s in the team with a better understanding of the position.”