The 20-year-old has averaged 16 disposals and 6 tackles this season after making his AFL debut in round nine last year.
Clarke, drafted by the Bombers with pick No.63 in the 2016 national draft, will now remain in the sash until 2021.
“I’m really excited to sign a new deal at Essendon. There’s an enormous amount of belief amongst the group that we are building towards something special,” Clarke told the club website.
“My focus is on continuing to work hard and learn from our experienced players to put myself in the best position to play senior football.”
“I am looking forward to the remainder of the year and seeing what we can achieve in 2019 and beyond.”
Essendon General Manager of list and recruiting Adrian Dodoro was delighted to secure the extension.
“Dylan has worked extremely hard during his time here and when given the opportunity in the senior side, he has been consistent in playing his role.
“He is a diligent hard-worker that strives for improvement in all aspects of his game. We are looking forward to seeing what he can achieve in the red and black.”