The 25-year-old midfielder's deal will now be lengthened until the summer of 2021. He had been in negotiations over a longer deal before the lockdown due to the coronavirus crisis.
Mowatt, who signed from Leeds United in 2017, has scored 12 goals in 101 games and captained the Reds this season in which he has impressed in the Championship.
Chief executive Dane Murphy said: “Alex Mowatt is a key member of Gerhard (Struber)’s squad. The club have been clear in its intent to keep Alex at Oakwell longer than his current deal permits. Retaining his services for at least another season is significant. Despite the club’s position and the uncertainties that cloud the future of the 2019/20 season, we remain positive and competitive on all fronts. Having Alex lead our team is key to this mentality.”
The statement added: "With the first team squad set to return to training on 25 May, our current attention is centred on following EFL guidelines and providing a safe and practical resumption to action for players and supporters alike. This week we will continue to make announcements to supporters and provide clarity on a path forward."