The new deal means the Scotland international scrum-half will be staying at Scotstoun until at least the summer of 2022.
Price - who came through the FOSROC Scottish Rugby Academy - made his debut against the Scarlets in 2014, before signing his first professional deal with the Warriors in 2015.
He has made 85 appearances for Glasgow and has scored 17 tries, most recently in December's victory over Edinburgh at Scotstoun.
The 26-year-old won his first cap for Scotland in the 43-16 win over Georgia at Kilmarnock's Rugby Park Stadium in November 2016 and has gone on to win 28 caps for his country, scoring four tries to date.
He was last week named in Gregor Townsend's Scotland squad for the upcoming Guinness Six Nations, with the squad currently in camp ahead of their opening match against Ireland in Dublin a week on Saturday.
Speaking to glasgowwarriors.org after signing the new deal, Price said: "I'm very happy to be staying. This club has given me a lot - I've been here for six seasons and I call the club and city home.
"You see how proud I feel about this club on the field - the excitement and buzz you get from the supporters is brilliant, and I've been very fortunate to be in this environment for a while now. It's something I think is very hard to find. You get boys coming into the club that say how great an environment it is, and how much everyone gets on and works with each other.
"That for me makes it easy to commit for another couple of years, when those foundations at the club are so firm. It's a special club.
"I met Danny (Wilson) when he started out with Scotland - I've spoken to him quite a bit over the last couple of months and I get on with him really well.
"I want to work on my leadership now I've got a number of games behind me, so I've spoken to Danny about that and the vision for the club moving forward."
Incoming Head Coach, Danny Wilson added: "We're absolutely thrilled that Ali (Price) has committed his future to the club.
"He's an outstanding man and player and I've enjoyed working with him in the Scotland environment.
"We believe he can continue to develop at Glasgow and this is a further statement of intent as we continue to build our squad for next season and beyond."