The 29 year old has achieved cult status amongst Swansea fans and has a image rights percentage included in his deal. He is the only player outside the Premiership to have this clause written into his contract.
Trundle has recently been linked to Portsmouth and his boy hood club Everton. He also rejected a £750k move to Sheffield Wednesday earlier this season. Although the new deal runs until 2009 Trundle will still attract the attention of bigger clubs.
Swansea chairman Hew Jenkins said "Obviously we are delighted Lee has finally signed because he played such a huge part in our success last year.
"His outstanding goalscoring record has continued again this season and keeping him at the club is a huge statement of our intent to continue making progress."