The 33-year-old joined the Seagulls from Sunderland in the summer of 2018 and had to settle for a backup role for a significant period, making a total of just nine first-team appearances in his first four seasons at the club.
However, Steele has since been handed regular first-team opportunities in 2023 under head coach Roberto De Zerbi and played his part in the second half of last season to help Brighton finish sixth in the Premier League and secure European football for the first time in their history.
Steele became De Zerbi's number-one goalkeeper after the Italian boss decided to drop Robert Sanchez in March, and he started 14 of Brighton's final 15 Premier League matches of last season, keeping six clean sheets.
Following the sale of Sanchez to Chelsea in the summer, Brighton spent in the region of £17m to sign 21-year-old Bart Verbruggen, who has been rotated with Steele between the sticks so far this season.
Indeed, Steele has been given the nod to start in nine of Brighton's first 14 matches in 2023-24 across all competitions, with Verbruggen playing in the remaining five fixtures.
Steele is still considered a valuable member of De Zerbi's first-team squad and he has decided to commit his future to Brighton by penning a new three-year deal.
"I'm very pleased for Jason. He's a great player," De Zerbi told Brighton's official website.
Technical director David Weir added, "Jason is key player for us, on and off the pitch. His attitude, leadership and what he brings to this club every day has been a massive part of our progress throughout his time here.
"I am thrilled that his loyalty and patience is now paying off, and that we have extended his stay with us through until at least June 2026."
Steele, who has extended his Brighton contract for the second time in the space of nine months, is one of eight senior players to pen fresh terms with the Seagulls in 2023 after Kaoru Mitoma, Lewis Dunk, Solly March, Adam Lallana, Evan Ferguson, Joel Veltman and Jeremy Sarmiento, the former of whom signed a new five-year deal two weeks ago.
Brighton's No.23 is in contention to start and make his 40th appearance for the club when De Zerbi's side travel to Goodison Park to face Everton in the Premier League on Saturday.