The 25-year-old Greek international has turned into one of the hottest prospect in European football by scoring 21 goals in 21 games for club and country this season with his €8 million release clause making him particularly attractive to suitors.
However, crucially, his new deal eliminates that release clause meaning there is now no limit to the sum Olympiacos can demand if they decided to cash in on their prize asset.
Liverpool, Chelsea and Arsenal were all linked with January moves for Mitroglou.
Mitroglou's new deal sees his contract extended by one year until 2017 and sees his salary jump from €600,000-a-year to €1million.
"I'm really happy that I renew once again with the team that belongs in my heart," said Mitroglou.
"I want to thank the club and the president Vangelis Marinakis who have always believed in me even at times when my career was not progressing as I dreamed.
"I will give everything in training and in matches to try and make our fans happy.
"Olympiacos is a family and we all struggle for the red and white. We are all proud of this team and we will give everything to produce more glory the club."
Olympiacos are currently 10 points clear at the top of the Greek Super League table as they aim to win their fourth successive title.
They are also in the last 16 of the Champions League where they will face Manchester United.