Walters was previously contracted until the end of 2018, but has decided to extend his deal to 2020 after being named in the leadership group for the first time in his career.
The 26-year-old was selected with the 53rd pick in the 2008 AFL National Draft, and has since gone on to play 94 games and kick 177 goals for the Dockers.
General manager of list management Brad Lloyd says the club is excited to be keeping Walters at the club for at least four more seasons, and believes the goalsneak is a valuable addition to the leadership group.
“It’s really exciting news for the club,” Lloyd said.
“Michael came in as a fairly late draft pick in 2008, but he’s worked extremely hard at his football to become a really high level player in the AFL.
“He performs week in week out and he’s always around and impacting key moments. He’s a player that is really important to us on the field and as a leader at our football club.”