The deal, which commits the Ivory Coast international to St James' Park until 2017, follows his arrival from FC Twente last season.
Newcastle boss Alan Pardew said: "Cheik has been immense for us this season and is exactly the type of player I want in my squad. He is fantastic on the pitch and in the changing room and is vital for everything we want to achieve.
"Cheik offers us strength and presence in midfield and has proved himself to be one of the best in his position in the Premier League.
"He's adapted brilliantly to the English game and I'm delighted he's signed a new deal with us today."
Tiote has impressed in his first season in England, and hit a stunning equalising goal for Newcastle when they fought back from 4-0 down to draw 4-4 with Arsenal at the start of February.
He and captain Kevin Nolan have become established in the centre of midfield, and Tiote is delighted to be staying at the club.
"I am very happy today to have signed this new deal with Newcastle United," he said.
"The experience of playing in the Premier League has been better than I ever hoped it could be.
"This is a great club and the fans have been brilliant - I have never known support like it."
* READ MORE ON TIOTE'S NEW CONTRACT IN TOMORROW'S NORTHERN ECHO *