On-loan defender Craig Dawson will join West Ham on a permanent transfer from Watford at the end of the season.
Since the centre-back's debut in December, West Ham have lost just three league games and currently sit fourth in the table.
The ex-West Brom defender's new deal runs until the summer of 2023.
"Craig's performances, attitude and the impact he's had demonstrate why he deserves a permanent deal," manager David Moyes said.
"He arrived with a wealth of Premier League experience and that's been really important to us.
"He had to be patient but he's comes in and grabbed his opportunity with both hands.