The 20-year-old, who has been part of the Swans academy since the age of 12, would have come out of contract at the end of next season.
Heeney told the club’s website he never entertained the idea of moving elsewhere.
“It is extremely exciting, it is where I want to be and I have loved the last two years,” he said.
“To sign a five-year contract is special and it gives me that security to really focus on footy now.
“It is an easy decision because I have loved the last two years and what the Swans have ahead is something extremely special within the group.
“I am looking forward to the future that is for sure.”
Sydney’s head of football Tom Harley said the club is thrilled to have secured the youngster’s signature long term.
“We’re rapt that Isaac has agreed to terms on a new five-year contract extension and has committed to the Club for the long-term,” Harley said.
“Isaac is clearly a talented player who has played some high-quality football so early in his career.
“Born and bred in the rugby league-dominated city of Newcastle, Isaac developed his game through the QBE Sydney Swans Academy. Alongside our other Academy players, he sets a great example for kids in New South Wales that they too can follow his pathway and play AFL at the elite level.
“We’re really excited about what the future holds for Isaac and look forward to him plying his trade in red and white for many years to come.”