The 23-year-old striker, who has scored six goals in seven league appearances this season, joined Inter in 2013 from Serie A rivals Sampdoria and became captain two years later at the age of 22.
Icardi was linked with a move away from the San Siro during the close season with media reports suggesting that several English Premier League clubs, including Arsenal and Chelsea, were vying for the Argentina international's signature.
Icardi's new contract has a buyout clause of 110 million euros (99 million pounds), which can only be activated by non-Italian clubs, and the striker will earn 5.5 million euros per season, according to media reports.
Inter, who are ninth in the Serie A standings after a 2-1 loss to AS Roma on Sunday, host Cagliari on Oct. 16 after the international break.
(Reporting by Silvia Recchimuzzi in Gdynia; Editing by Toby Davis)
