The 25-year-old was set to become an unrestricted free agent at season's end, but says he is keen to remain a one-club player and achieve success at the Bombers.
McGrath has played 141 games since being snared by Essendon with pick No.1 at the 2016 national draft, and believes bigger and better things are to come under coach Brad Scott.
"I am super excited to commit to the football club long term," McGrath said in a statement.
"Essendon showed belief and trust in me as an 18-year-old, and I am extremely grateful to be a one club player.
"Our playing group is determined to grow and push our boundaries to become a great team.
"We understand more and more each day what that will take, and the hard work required. But I firmly believe success and improvement is in our capability."
🫶 — Essendon FC (@essendonfc) https://t.co/6Aj2yNrJwD pic.twitter.com/omqT56qvCxMay 2, 2024
Despite experiencing two injury-riddled campaigns in 2020 and 2021, McGrath has rebounded to play arguably the best football of his career in the past three seasons, thriving in a more familiar defensive role.
Last year, McGrath averaged 22.8 disposals and 5.4 rebound 50s per game to finish fourth in the club's best-and-fairest award.
He is averaging 25.4 disposals and 5.9 rebound 50s per game this year, playing a key part in the Bombers' strong start to the season.
Essendon will be looking to build on last week's draw with Collingwood when they take on West Coast in Perth on Saturday night.
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