Forsberg has been one of RB Leipzig's key players this season, scoring five goals and providing nine assists, and the 25-year-old said he is happy to be staying at the club despite reported interest from Juventus and Arsenal.
"I am delighted that I have extended my contract for another year," said Forsberg.
"I feel absolutely right and appreciated here and would like to achieve much with RB Leipzig.
"The club is ambitious and has a huge potential. I want to contribute my part to a continued successful future."
Director of football Ralf Rangnick hailed Forsberg's contract extension as a sign of RB Leipzig's desire to grow further, with Champions League qualification on the cards.
"He has played an outstanding Bundesliga season and feels good about the club and the city," Rangnick said.
"The premature renewal of the contract confirms once again the path we have taken together and will go in the coming years."