Kennedy was one of Cronulla's most consistent performers on their run to the top four in Craig Fitzgibbon's first season in charge last year.
The 25-year-old made his representative debut for the Indigenous All Stars in 2022 and has played his entire NRL career to date with the Sharks, compiling 67 NRL appearances since 2019.
"I've been here since my SG Ball days and I love the club, the culture we have here and have close relationships with the players here at the Sharks," Kennedy said.
"I think we are building something special here and I'm excited to be a part of it."
Kennedy joins reigning Dally M Medallist Nicho Hynes and back-line teammates Siosifa Talakai and Jesse Ramien in re-signing with the club since the end of last season.
"Will is a player who works very hard at his game and his continued improvement and development is evidence of that," Fitzgibbon said.
"He has come through our pathways, winning an SG Ball and NSW Cup competition along the way and is a valuable member of our team, trusted by his teammates."
Veteran Wade Graham, second-rower Teig Wilton and winger Matt Ikuvalu are among the first-graders without Sharks deals beyond 2023.
Elsewhere, Parramatta have re-signed up-and-coming hooker Brendan Hands as a reward for his solid start to life as an NRL player.
A Penrith junior, Hands had been stuck behind Api Koroisau, Mitch Kenny and Soni Luke before joining the Eels last year.
The 23-year-old has played three first-grade games to date, scoring on debut against Penrith in round four.
The new contract is a strong endorsement in Hands as a potential full-time hooking option at Parramatta once 33-year-old veteran Josh Hodgson retires.
"I'm stoked to extend my stay here at the Eels, I've really bonded with the boys and it's been exciting playing alongside them," Hands said.
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