Manager Brendan Rogers confirmed that the 21-year-old, who only had on year left on his previous arrangement, had put pen to paper on a 'long-term deal'.
"Joe is fantastic. While he is not at the same level, he is that Xavi or Iniesta type of player," Rodgers said.
Meanwhile, 22-year-old Welsh left-back Neil Taylor has signed a new four-year contract to remain at the club.
Swansea's debut season in the Premier League kicks off on Monday 15 August, away at Manchester City.