The 24-year-old Johnston starts for a new-look England against the Barbarians at Twickenham on Sunday, and will stay with a Saracens club who have recently recruited Australian veteran Rod Kafer from Leicester to add experience and coaching to their backline.
Capped four times by England – against Argentina and New Zealand in 2002 – Johnston has been with Sarries for the past six seasons.
"Ben has been playing very well over the last month or so," said Saracens coach Wayne Shelford. "And as he was due to be out of contract at the end of the season – re-signing him for the club is fantastic.
"We know the guy, we know what he's capable of and we know that he's going to be a great asset not only for Saracens, but for England too.
"The back-line isn't going to change that much for next season, we aren't losing too many players and we wantto keep the consistency shown in recent weeks, and Ben has proved that he is a very capable footballer at outside and inside centre."
Johnston himself added: "I'm made up to have signed a new contract with Saracens. I've been at Saracens for quite a few years now and couldn't really imagine playing anywhere else.
"The rugby we've been playing lately has been really enjoyable and there's a really good feeling inthe squad. I'm looking forward to being part of that again next season."
Meanwhile, Saracens' Awards Dinner was held this week at the Hilton Park Lane Hotel London. The annual event was attended by 500 guests who saw Saracens stalwart Richard Hill walk away with three much-warranted awards.
The England star grabbed the Players' Player of the Season and Player of Season awards to add to the Fans' Player of the Season Award he presented two weeks ago.
Other winners on the on a glittering night were the impressive England Sevens star Richard Haughton who picked up Young Player of the Season, and Thomas Castaignède who was awarded Try of the Season for his effort against London Wasps earlier this year.
Aston Croall picked up the Peter Deakin Award for Services to the Community Award.