The new deal will keep Mills, who already had two years remaining on his contract, in the harbour city until the end of the 2023 season.
Mills, a part of the Swans’ academy, played 22 games in his debut season last year, after being selected with pick No.3 in the 2016 National Draft.
“We are excited to have Callum commit to the club long term,” Sydney’s Head of Football Tom Harley said.
“Although Callum’s career is only 12 months old, we are extremely confident of the impact he will make at our football club.
“He represents what we want to stand for on and off the field, and will continue to play a key role for us.”
Mills is the second Sydney academy player to sign a long term deal in recent months, with Isaac Heeny signing on until 2022 in December last year.