The news caps a good week for the Newcastle-born 20-year-old, who made his full debut for the Club in Tuesday night’s EFL Cup win against Cheltenham.
Academy product Sterry made his senior bow as a substitute against Tottenham on the final day of last season.
The right-back is the latest of Rafa Benitez’s young players to commit his long-term future to the Club, following Freddie Woodman, Rolando Aarons and Adam Armstrong who have all agreed new contracts in recent weeks.
Sterry said: “I’m delighted to sign a new contract with Newcastle, my boyhood Club.
“I’ve worked really hard to get here and this week has been really good for me, starting for the first time and now this.
“I’ve learnt a lot, especially under the manager but also under every coach and every manager, and I’d like to thank my family and girlfriend.
“Now I just need to keep working hard and hopefully get more opportunities to play in front of our fans.”