Bohannon is an academy graduate at Lancashire and was the club's leading run scorer during the 2021 LV Insurance County Championship - scoring 853 runs from just 14 innings.
His impressive performances on the domestic scene quickly led to an international call up as the 24-year-old joined the England Lions on their recent tour of Australia.
Speaking about his contract extension on the club website, Bohannon said: "It is a great honour to sign this contract to represent the Red Rose for another three seasons.
"Since first pulling on a Lancashire shirt in the age-group system in 2010 it has been a dream come true and to be able to do it alongside so many friends in the same dressing room is brilliant.
"Last summer was my most productive season with the bat and it was great to travel Down Under with the Lions. All eyes are now on the new season and working towards a successful one for Lancashire."
Lancashire head coach Glen Chapple added: "Josh enjoyed a superb summer with the bat in first-class cricket last year and had it not been for a number of rain-affected games - meaning that he only got to bat 14 times - he would have comfortably passed the 1,000 runs mark.
"He was rightfully rewarded with an England Lions call-up at the end of the season, and I have no doubt that further recognition will come his way if he continues to perform with the consistency shown throughout last season."
Top-order batsman Bohannon, who made his first-class debut in 2018, also has a knack for picking up useful wickets with his medium-pace bowling and has made more than 40 white-ball appearances for the club.