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The 22-year-old loose-head joined Quins' academy as a 13-year-old and since his first-team debut in December 2020 has gone on to make 58 appearances.
He played in all 18 of the club's Premiership matches during 2023-24 and was named in the Premiership team of the season at the end of the campaign.
Baxter won the first of his six caps in July during the Test series against New Zealand, having also represented England at under-18 and under-20 level.
"If someone had told me 12 months ago I was going to have the year I've had, at first, I wouldn't have believed them," Baxter said, external.
"Good performances at club level with Quins allowed me the opportunity to go on tour with England and earn my first caps for my country, and I believe I've developed so much from those experiences.
"Hopefully there is more to come."
Baxter joins a number of Quins players to sign new deals in recent weeks beyond this season, including England fly-half Marcus Smith, second row Stephan Lewies, winger Caden Murley and scrum-half Will Porter.
Harlequins head coach Danny Wilson said Baxter was an "outstanding rugby player" who has developed at a "rapid rate" in his time at the club.
"He's another homegrown talent that took their opportunity when introduced into the senior setup and he's never looked back," Wilson said.
"Fin has a desire to learn, which is vital in any player's journey to becoming an elite operator in their position, especially in the front row."
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