Reid has played 34 times for the Hammers this season, taking his tally to 70 appearances for the east London side since the 24-year-old signed with West Ham from Danish club side Midtjylland following the World Cup.
"I've really enjoyed being here,'' Reid said on the West Ham website after his re-signing. "It's a good club and we've done really well over the last couple of years. Now I'm looking forward to the next two years.
"I think I have played some good football over the last two years but that goes for the whole team as well. Hopefully we can continue that.
"Of course we now plan to build on the last two seasons.''
Reid has played 14 times for New Zealand, including scoring a historic equaliser against Slovakia at the 2010 World Cup. He was named as the side's new captain following the retirement on Ryan Nelsen.
With Nelsen leaving the Premier League earlier in the season to take up a coaching post with MLS side Toronto FC, Reid is the only New Zealander playing in England's top league.
- nzherald.co.nz