Schmeichel was a vitally important member of Claudio Ranieri's starting XI last season, playing every single minute of the Premier League campaign as the East Midlands club won their first ever league title.
The 29-year-old had been linked with a move away from the King Power Stadium this summer after displaying such impressive consistent form.
However, he has instead chosen to commit his future to the club by signing a new long-term deal which ties him to the club until 2021, when he will be 34 years old.
Speaking to the club's official website after signing his contract, Schmeichel explained that seeing the progression the club has made from Championship no-hopers to Premier League winners assured him that his future could not possibly lie anywhere else.
He said: "I'm just buzzing and I can't wait for the season to get started. It was a very easy decision. It was a case of coming back after winning the Premier League and making sure that the hunger was the same within myself and the squad.
"I've come back absolutely convinced that this is the place for me to be. We've taken some massive steps and ever since I arrived it's been fantastic. I've loved being here from minute one."
Schmeichel also took to Twitter to further express his joy, writing: "Absolutely delighted to have signed a new five-year contract with LCFC".
Schmeichel's decision shows that he is clearly not fazed by the increased competition he will meet for his starting place this season after Leicester signed Hannover 96 and Germany international stopper Ron-Robert Zieler earlier this summer.