The new contract will secure Barnett at the Club until at least the 2020 season.
From Wingham, the 22-year-old spent some of his junior years at the Knights before moving to the Canberra Raiders, where he made his NRL debut in 2015.
Barnett returned to the red and blues midway through the 2016 season and averaged more offloads and runs per game than any other player at the Club.
“It’s a great opportunity for me to develop my game further and I’m very excited to be staying in Newcastle for another three years,” Barnett said.
“The Club has shown great faith in me and I want to repay them with hard work.
“I’ve just got to keep working week-to-week and improving my game and hopefully go through this rebuilding phase of the Club to get it back to where it was.”
The 2015 NSW Cup Player of the Year has 12 games of NRL experience, 10 of which have been with the Knights.
“We’re pleased to have Mitch sign on for another three years with the Club,” coach Nathan Brown said.
“Mitch epitomises the well known saying at this Club and that is being a player other players want to play with.”