The 24-year-old, who joined Frankfurt in 2017, made his breakthrough last season by scoring 10 goals in 48 games as an attacking midfielder or centre forward.
He netted both goals in Frankfurt’s 2-1 win at Arsenal last November in the group stages of the Europa League then netted a had out in the last 16.
Frankfurt host newly-promoted Arminia Bielefeld on Saturday in the 2020/21 Bundesliga season’s opening weekend.
“I feel very comfortable in Frankfurt and I want to take the next steps here,” said Kamada, who has made four international appearances for Japan since his debut last year.
“The club went out of their way to look after me and made me feel like they really wanted to keep me.”
“Of course, I would like to repay that with good performance and develop myself further.”
Kamada spent 2018/19 on loan at Belgian side VV St. Truiden, scoring 16 goals in 36 games, which helped him develop, according to Frankfurt sports director Fredi Bobic.
“The loan did him good. He took a big step forward in Belgium and was convincing for us last season. We are happy that Daichi has decided to stay,” added Bobic.