The 21-year-old, who was reportedly the subject of interest from a club in China during the last transfer window, has extended his deal by a year, tying him to the club until 2021.
The Colombian forward is the Scottish Premiership’s joint leading scorer. He joined Rangers on a three-year contract last summer from HJK Helsinki and has scored 17 goals in all competitions this season.
“I am very happy to have signed a new contract with Rangers,” Morelos told the Rangers website. “I know how important the club is in Scotland, how many titles that it has won and how much history that it has. I am really happy here and I am working hard for the team.”
Manager Graeme Murty said: “We are delighted that Alfredo has committed his future to the club. He has a massive opportunity at this club and we feel that he can continue to improve and even realise his international ambitions here at Rangers and help the club to challenge for silverware.”