The 21-year-old, who made his Rovers debut in March, will stay at Ewood Park for the 2015-16 campaign.
“It’s taken a while, but I’m very pleased to get my contract signed and sealed, and I’m looking forward to the season ahead,” Lenihan told the club website.
“It’s a massive season for me. For playing games and to make the break into the first team, I think this is the main season for me. I just need to work hard in pre-season and see where it takes me. If I do well in training, then hopefully the manager will pick me.
“This is my fifth season and I feel ready to make myself an established player here. The fans have been great over the past few years and I’ve experienced some tough times, but now I’m ready to put those times behind me and put the good times ahead.”
Lenihan spent four months on loan at Burton last season, making 17 appearances.
Meanwhile, Rovers midfielder Josh Morris has joined Bradford on a three-year deal.
The 23-year-old agreed the termination of his Rovers contract to move to Valley Parade on a free transfer, although the Championship club have included a sell-on fee.
Bantams boss Phil Parkinson told the club’s official website: “We are delighted to have Josh on board.
“We have tracked his progress for some time and he enjoyed a good season in League One with Fleetwood Town last year.
“He got eight goals from midfield for Fleetwood last season, making him one of their top scorers, and he will add something extra to the squad. We look forward to working with him.”
Morris has also enjoyed loan spells with Rotherham, Carlisle and Yeovil.