The 26-year-old played a key role last season in helping the Cherries stay in the Premier League at the first time of asking, making 21 league appearances.
Arter also looked set for a place at Euro 2016 due to his impressive form, but injury prevented him travelling with the Republic of Ireland squad to France.
Since signing from Woking back in 2010, Arter has made 203 appearances for the Cherries.
"We're delighted to secure Harry's long term future at the club,” said AFC Bournemouth chief executive Neill Blake.
"Harry has been on every step of the journey and he has been an important figure in our rise through the leagues.
"He has made over 200 appearances for the club and has also become an international footballer, so we're really pleased to give Harry this new deal."