The 24-year-old, who can play full back, wing or centre, has been one of the star performers at Warriors in recent seasons, culminating with being named club captain in 2010.
Head Coach Richard Hill said: "Chris is a player who, from the first moment I arrived at Sixways, I have always been impressed by. He has an absolutely superb attitude and real leadership qualities.
"He has endured a wretched time over the last few years with the injuries he has sustained and has shown great resolve and strength of character to comeback stronger.
"At the moment we are seeing him get back to real top form again and signs of the huge potential we all know he has got.
"Chris is a consistent performer, a great defender, hard tackler and someone who understands our defensive system under Phil Larder. He is also an excellent kicker with ball in hand and makes the right decisions, which is crucial for the position he plays in the team.
"I know that Chris will only get better at Warriors and so we are delighted to retain his services and that he will continue his career here."
Pennell first broke into the Worcester team during the 2007/08 season when he made his Premiership debut away against Bath. Pennell made a total of 20 appearances during his first senior season for Warriors, including 12 in the top-flight.
Worcester born-and-bred, Pennell has represented England at Under-19 level and became a key performer for the club during the 2008/09 campaign until he suffered a serious knee injury in European competition.
The dynamic back returned to full fitness in the 2009/10 season and made a further 16 appearances during the campaign and scored five tries.
Pennell's commitment and determination to battle back from adversity was again tested last season when, just weeks after being named captain, he suffered an ankle injury that ruled him out of the first half of the RFU Championship season.
However, Pennell again came back stronger and played a key role from full back as promotion was secured back to the top-flight of English rugby.
"I'm obviously very pleased to be able to stay at a club that means so much to me," said Pennell. "I am really enjoying my rugby at Sixways at the current time and being a part of the tight knit group of players that we have at the club.
"The team has started 2012 in strong fashion, particularly on home soil, and we're all looking forward to making more progress not only in the closing months of the current Aviva Premiership season but also the future.
"We are approaching that time of year when some players will ultimately move on and new faces will come in. However, I'm excited by the club's plans to take us to the next level and we have a very strong core of players that not only have the right work ethic but also a real determination to bring success to Sixways."