The 19-year old is yet to play a senior game after being selected with pick 50 in the 2012 National Draft.
Western Bulldogs list manager Jason McCartney says the signing is important as the club moves to secure a core group of young players.
“Josh has shown a real appetite to learn in his first year at the club and we are really happy with his progress so far,” McCartney said.
“He is a quality person and has conducted himself as a true professional in his young career to date.”
Prudden played for the Murray Bushrangers and captained Assumption College before joining the Dogs.
He battled injury in 2013, playing seven games for the Williamstown reserves before he was forced to the sidelines with an ankle problem.
The midfielder also played two senior VFL games this year, showing his potential with an impressive 23 disposal performance against Collingwood.
