The 32-year-old defender, who's been with Chelsea since 2012, will remain with the Blues until June 2024.
On signing the new deal, Azpilicueta said: "Well, it's been nearly ten years since I first stepped up into Stamford Bridge playing in my first game for Chelsea.
"I would like to say a big thank you to all of you, you have been amazing throughout this time.
"I'm really excited by what is coming, to enjoy more memorable moments together and I can't wait to be back here [Stamford Bridge] together and fight for more trophies."
Azpilicueta's previous terms were due to expire this summer, but a performance-related clause was activated to ensure his deal was extended for 12 months, The Athletic reports.
The Spain international was heavily linked with a move to Barcelona, but has now committed his future to the Stamford Bridge side.
Antonio Rudiger and Andreas Christensen already left for free following the expiry of their contracts, and Chelsea were keen not to make a trio of defensive departures.
Kalidou Koulibaly recently joined from Napoli, but Chelsea missed out on Jules Kounde, who joined Barcelona.
It was claimed new owner Todd Boehly was ready to deny Azpilicueta a move to LaLiga, before he signed his new deal.
Since joining the club the defender has 472 appearances in all competitions for his side.
Azpilicueta has always appealed to Tuchel due to his ability to play in a back three or at wing-back, which suits the German's structure.
Chelsea remain in the hunt for Brighton left-back Marc Cucurella, and are hopeful of securing his services.
Inter Milan's Denzel Dumfries and Leicester centre-back Wesley Fofana also remain targets.
Tuchel's side are looking to get off on the front foot when they kick off their Premier League season against Everton at Goodison Park on Saturday.
The Premier League is back and talkSPORT has it covered, with games on Friday, Saturday and Monday, beginning with Crystal Palace vs Arsenal on 5 August