After being promoted into the first team at the beginning of the season and starting the Saints' first game against Manchester City, the 18-year-old has been on manager Nigel Adkins' teamsheet for each Premier League fixture since.
And, after a morale-boosting 3-1 win over fellow strugglers QPR, Ward-Prowse told the club's official website: "I'm absolutely delighted.
"It was nice that we go the win on Saturday and it's nice to put pen to paper. I can kick on from here.
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Adkins praised his 18-year-old prodigy, adding: "As one of the youngsters coming through the system, James has done ever so well since he stepped up to the first team during pre-season.
"He started the first game of the season and played there on merit; he works hard in training.
"He's a great lad in respect of being a role model for the younger players and he works very hard at his game every single day.
"We're delighted that we've got a hungry and ambitious young man who has now committed his longer-term future to the football club."