The Montenegro star had attracted interest from England but has put pen to paper on a new deal with the Viola after several months of negotiations between the two parties
The Montenegro international's previous deal expired in the summer of 2013 and Fiorentina had been keen on granting him an extension amid reported interest from Arsenal.
Fiorentina have not disclosed the terms of Jovetic's new contract, nor whether a release clause has been inserted into the deal.
The 21-year-old has been a mainstay for the Viola since joining the club from Partizan in 2008.
Fiorentina are 10th in the Serie A standings, seven points adrift of leaders Juventus.