The 28-year-old Sweden international arrived at Carrow Road from Blackburn in July 2013 and has made 122 appearances for the Canaries.
Full-back Olsson told canaries.co.uk: “It’s nice to get this done so now I can focus 100 per cent on the league and trying to help us get back to the Premier League.
“I enjoy it here; I enjoy this club and I enjoy this city and the fans are so passionate. It’s always a great feeling to step out at Carrow Road.
“Our main target is to go up. It hasn’t been going that well for a few games, but that’s how it is sometimes. We can turn it around, and when we do, hopefully we can earn that promotion.”
Boss Alex Neil added: “Martin has been a consistent performer for me since I’ve been here, so it’s very positive news that he has signed this new deal with the club.
“He will be a key member of our squad going forward as we look to improve our form in the league and move back up the table.”