The Scotland under-20 international signed his first professional contract with the Warriors in December, and has made nine appearances this season.
"The last few months have been great, as I've played regularly and feel I've made a positive impact," Price said.
"Being able to train and play with quality players at Scotstoun has also allowed me to improve my game."
Warriors head coach Gregor Townsend said: "Ali is continually developing as a scrum-half and it's great news that he's staying with us for the next couple of years.
"He's worked hard on his game over the past 12 months, and you can see the confidence he now has in his kicking game and taking on the defence with ball in hand.
"The most important attributes of a scrum-half are a fast and accurate pass, as well as a high fitness level and Ali has done well in these areas this season, seizing the opportunity to play for us in some important games."
Glasgow Warriors scrum-half Ali Price has signed a new two-year deal at the club, which will expire in May 2018.