The Northern Ireland midfielder joined the Saints from Rangers in 2012 and has been a key component in them establishing themselves back in the Premier League.
Davis hopes that the club can continue to grow during the remainder of his stay on the South Coast.
"I'm excited to see where we can go together over the next few years," he told reporters.
"I'd like to win trophies here and continually try to improve our league position. I feel we can do that."
Former Fulham and Aston Villa man Davis, 29, has made 83 appearances for Southampton.