Davies' extended deal makes him the latest in a long line of Tottenham players to sign new contracts this season.
Davies joined Tottenham from Swansea in July 2014 and has made 43 league appearances for Mauricio Pochettino's side.
The 23-year-old's composed displays in second-placed Tottenham's last four league games have helped them keep in touch with leaders Chelsea in the title race.
Davies' extended deal makes him the latest in a long line of Tottenham players to sign new contracts this season, following Harry Kane, Dele Alli, Eric Dier and Jan Vertonghen in committing his future to the north London club.
"It's a fantastic club to be a part of at the moment and the way we're working on the training pitch and the way we're playing the games you can only see it getting better really," Davies said.
"If you'd have said this before the start of my career I would probably have been in shock, I wouldn't have believed it.
"Since the gaffer came to the club he has taken us from strength to strength and as a team I think it's showing on the pitch."