The 20-year-old - who came through West Brom's youth team - has made 10 appearances for the club this season, scoring six goals, and has committed until June 2017 after penning a three-and-a-half-year deal on Monday.
Berahino has come to prominence in the Premier League this season with a series of promising displays, including scoring the winner in a 2-1 victory over reigning champions Manchester United at Old Trafford in September. He also notched a hat-trick in the club's 3-0 victory over Newport County in the Capital One Cup in August.
|WEST BROM LATEST
|21/2||Saido Berahino is 21/2 with BetVictor to score the first goal in West Brom v Manchester City|
"It's a fantastic story for us and especially for our hard-working academy staff, who have played a fundamental role in his development over the years.
"Producing one or two players who can supplement the first team is something we want to achieve every year. We hope this is the start of that process as we feel we have a number of other young, exciting players coming through.
"It's difficult for any 20-year-old to get into a Premier League side and there are going to be times when Saido's maybe not playing as much as he would like to.
"He's not the finished article and he has to remain patient, as we do with him."