Parry won his first Test cap against France and has been in impressive form at regional level for several years – form for which he was rewarded with an international call-up.
The hooker scored his first Test try on his first start for Wales against Italy and is well used to crossing the whitewash at regional level.
Parry has a total of 19 tries in an Ospreys jersey, his most recent effort coming during last Saturday’s Guinness PRO14 Rainbow Cup win over Cardiff Blues.
Parry made his Osprey debut off the bench in the opening round of the 2014/15 season in a 44-13 win over Benetton at the Liberty Stadium.
Since then, he has established himself as a mainstay at the region and joined the Ospreys centurion club earlier this season by making his 100th appearance for the side.
Parry is the only forward in PRO14 history to have two tournament hat-tricks to his name.
“I’m really pleased to have signed a new contract keeping me at the region for another two years,” he said.
“I love playing for the Ospreys and take great pride in pulling the shirt on every occasion I have the opportunity to do so.
“There is a real buzz and excitement within the region with a lot of changes happening both on and off the field.
“These changes have meant we’ve taken big strides this season as a side as well as building a strong culture and team environment which challenges you to be the best you can every day.
“I’m looking forward to seeing where we can go as a group while also pushing myself to keep improving as a player.”
Ospreys head coach Toby Booth said: “Sam became a Wales international this year after his performances with the Ospreys.
“While it was a great personal accolade for him, it also reflected well on what we are doing at the Ospreys.
“He is a hooker who can influence the game and he has a knack of scoring tries which is a great characteristic for the team.”