The 26-year-old was a key part of the Terriers' promotion campaign last term, making 37 Championship appearances for David Wagner's side following his switch from Dynamo Dresden on a free in July 2016.
The new deal runs to the end of the 2018-19 season, including an option for a further 12 months, and is the latest in a string of renewals that has also seen the likes of Rajiv van La Parra, Chris Lowe and Elias Kachunga commit their futures to the club.
"Michael was a big player for us last season as we gained promotion to the Premier League," Wagner told the Huddersfield website. "I think everyone can see how big of an influence he is in the dressing room and how good of a character he is for the team.
"He is a leader on the pitch and carries responsibility for his teammates, which attributes we want our players to have.
"Over the last season he showed how his qualities suit English football and our style of play. Now the test for him and the team is make the step up into the Premier League."
Huddersfield begin their season with a trip to Crystal Palace on Saturday afternoon.