The 27-year-old German joined the Terriers from 1860 Munich in June 2016 for a then club record fee of £1.8m.
He made 48 appearances last season and scored the winning spot-kick as the Terriers beat Reading on penalties in the Championship play-off final.
"Christopher was one of our standout players last year," said the Premier League club's head coach David Wagner.
Huddersfield Town defender Christopher Schindler has signed a new three-year deal, with the option of an extra year.