It will be Raikkonen’s fourth successive season with Ferrari, the Finn having rejoined the squad for their 2014 campaign. He previously drove for them from 2007 to 2009, winning the drivers’ title in ’07.
"I'm really happy for the renewal of my contract, I'm happy to be here now and to stay for next year," said Raikkonen. "It's nice to know that the team believes in me and I believe in them. Now we can put all the effort in the racing and try to achieve better results."
Raikkonen, whose F1 career started with Sauber in 2001, has 20 Grand Prix wins to his name. Nine of those were with Ferrari, though all of those came in his first spell at the team. He had also won with McLaren and Lotus.
In his second stint with Ferrari, the 36-year-old has scored seven podium finishes. He partnered Fernando Alonso in 2014, before Vettel joined Ferrari in 2015, since when the German his taken three race wins.
The announcement means the top three teams - Mercedes, Ferrari and Red Bull - now look set to field unchanged line-ups for 2017.