Lynn, who has represented Heat since 2011, will continue with Brisbane Heat until the 2021-22 season.
The 27-year-old had sustained a shoulder injury for the third time in two years while attempting a diving outfield catch for Kolkata Knight Riders (KKR) in the early part of the 10th edition of the Indian Premier League (IPL) season.
"I'm honoured that the Heat have shown confidence in me for the coming seasons and given us the opportunity to achieve something special as a club in the future," said an excited Lynn, the BBL player of the series last year.
Lynn and Heat captain Brendon McCullum cut a swathe through the BBL last season, with the former New Zealander equalling the fastest ever 50 for Heat, off 18 balls, while he and Lynn produced a record unbroken stand of 148 for the second wicket against Perth at the WACA.
The 27-year-old right hander said he was making steady progress in his return from shoulder surgery.
"I've had some good reports from the surgeon and the QC medical staff and we're working to the recovery plan. It is feeling okay now, although there is still a way to go,'' Lynn said.
Heat coach Dan Vettori said the club had created a formidable foundation to build upon for the future.
"Lynny is a dominant, world-class player and as coach, I'm delighted he will be with us for the foreseeable future,'' he said.
"The playing group we are assembling will give us impact and options as we enter the next few seasons," he added. (ANI)