Striker Chambers, 22, scored nine league goals last season as York won promotion back into the Football League after an eight-year absence.
Chambers told BBC Radio York: "I'm glad it's all over - it shows the club's commitment to me."
He joined the Minstermen on loan from Leicester City in November 2010, before signing full-time the following May.
Use accessible player and disable flyout menusIn May Chambers scored York's opening goal in the 2-1 victory over Luton in the Blue Square Bet Premier play-off final.
"As soon as the club said they wanted to keep me on for longer it was something I wanted to get sorted out as soon as possible," said Chambers.
"I think we'll be alright in League Two if we keep the same sort of squad and play the same sort of style, which is what the manager wants.
"We won't be too far away. We'll definitely be an established side, if not pushing further up the league."
On Wednesday, City confirmed midfielder Scott Kerr, who won last season's players' player of the year award, had extended his contract by another year.
Source: BBC Sport