The 26-year-old striker signed from Blackburn in 2009 and has revealed his delight at extending his stay with the Foxes.
"It's great to know that my future is with Leicester City," he told the club's official website.
"The ambition of the club and its new owners match my own and hopefully we can take a step towards that this season by reaching the play-offs."
Gallagher has scored nine goals this term, helping Sven-Goran Eriksson's side up to ninth place in the npower Championship.
The Scot's initial deal was due to expire in 2012.
Source: PA
Source: PA