The ex-Shimizu S-Pulse defender committed to remain at Hunter Stadium until the end of the 2016-2017 season.
The technically astute Korea Republic youth international has scored twice in eight appearances since linking with the Jets in February.
Lee has also become a favourite with the club’s fans – his positive runs down the pitch and incisive play both in defence and attack drawing applause from pundits.
The 23 year-old was delighted to prolong his link with the Jets, having adjusted well to life on and off the pitch.
“I am happy to stay at Newcastle,” Lee said through an interpreter. “It’s a very good place, and I have enjoyed my time at the club and with my team-mates,” Lee said.
“But the main reason I have extended my contract is because the club showed that they really wanted me to stay, the coach wanted me to stay.
“After some time back in Korea in the off-season, I will come back to Australia with my family alongside me."
Newcastle CEO Mitchell Murphy said: “We are determined to put together a playing roster for next season that will enable us to make the finals and securing Ki-Je is a massive boost to achieving that primary objective.
“Ki-je is a high quality left-back, but the added bonus for us is he can also play higher up the field if required. He has already proven he can score goals.
“Our holistic planning for recruitment and retention with an eye to next season will continue to be methodical, and our fans can be assured we’ll be making decisive decisions over the next few months in the build up to the pre-season.
“Beyond playing ability, we want players with the right attitude.
“Nigel Boogaard (signed from Adelaide United for the next three seasons) will be a fine leader both on and off the pitch and in Ki-je’s case his commitment to training is first-rate, he has embraced living in Newcastle and has been very popular at junior coaching clinics.”
Jets coach Phil Stubbins said: “We have already witnessed Lee Ki-je’s quality in the Hyundai A-League, but I believe that there is plenty of improvement left in him.”
“We must remember that when Ki-je arrived at the Club he had had no pre-season, and no previous interaction with Australia.”
“He’s adapted rapidly – culturally and from a footballing perspective – and that’s something he deserves to be commended on. The longer Lee Ki-je is with us, the better footballer I believe fans will see.”