Formula One said in a statement the contract extension from 2027 came after the announcement of a significant refurbishment of the Hungaroring, including a new pit building and main grandstand.
Hungary has been part of the world championship since 1986 with its circuit some 20km outside Budapest. Seven-time world champion Lewis Hamilton has won there a record eight times.
More than 300,000 fans are expected to attend this weekend's race, up from 290,000 last year.
"To see the commitment from the promoter in Hungary to develop the facilities and further enhance the experience for fans is another important step and something we want to see all our events doing," said F1 chief executive Stefano Domenicali.
Hungaroring president Zsolt Gyulay said the circuit renovations were expected to be completed by 2026.
"Given the astonishing rise in F1's global popularity, which now sees more venues than ever before competing to join the calendar, today's signing marks a hugely significant achievement for us," he said.
