The new deal will keep him at the club until 2011.
“We are delighted that we have been able to agree an extended deal so quickly with Daniel”, said manager Klaus Allofs.
“He has been at the forefront of our performances in recent months and has played consistently well.”
Jensen said: “Of course I’m happy to be able to carry on with Werder. I am sure that there are possibilities here of achieving success.
“That was a big plus with Werder. There was interest from other clubs, with a few better offers financially, but I wanted to stay here and achieve something.”
Jensen joined the German side in 2004 from Real Murcia.
