The deal carries an average annual value of $800,000 and runs through the 2023-24 season.
The extension also gives the 31-year-old some stability. He spent the majority of his first five seasons in Pittsburgh in a reserve role, typically only seeing playing time when other defensemen were injured.
But Ruhwedel has taken on a larger role this season, scoring one goal to go with his five assists in a career-high 47 games so far. Pittsburgh is tied with Carolina for first place in the Metropolitan Division.
"Chad exemplifies what it means to be a teammate," Penguins general manager Ron Hextall said. "His work ethic and positive attitude never waver and we are happy he will be a part of our team for the next couple of years."
The Penguins, after a topsy-turvy start to the season, have rallied since the return of captain Sidney Crosby. Entering the Saturday action, Pittsburgh had 70 points to share the division lead with the Carolina Hurricanes. The Penguins have been bolstered by an impressive run on home ice, going 14-6-5 at PPG Paints Arena.
The Associated Press contributed to this report.