The 30-year-old was out of contract at the end of the season but put pen to paper on a new contract yesterday.
Hemed has scored 33 goals in 97 matches since joining from La Liga side Almeria in June, 2015, and was a key part of the squad promoted into the Premier League last season.
He was linked with moves away from the club during the summer transfer window but said: “I’m very happy and delighted to have signed a new contract. For the last two years I was part of the team that was trying to make it and then got promoted, now I can be happy and enjoy the Premier League with Brighton.
“In the summer, no one knew what was going to happen with me and the last day was still an option I would leave but I said I wanted to stay and show the club I can be part of the team and play in the Premier League.
“I’m happy I started the season well and it’s made the club take this decision. It’s shown me they’re happy with me and want me for longer.”
Albion boss Chris Hughton said: “Tomer has been brilliant for the club since we signed him in 2015. He has scored crucial goals in both the Championship and Premier League in his time here.”