It is a sign of faith in the track the club is heading down despite its shocking start to the season where it has lost its first two games by a combined total of 227 points.
Grimes has been a standout performer in the past 24 games, finishing second in the club best and fairest in 2012 and being among the club's best in defeat in round one and two.
He told the club website that the deal "all happened pretty quickly"
"I was glad it all happened this week, because I really wanted to show the faith that I have in the club and where we're heading. I’m definitely not heading anywhere, and I’m sticking to it," Grimes told melbournefc.com.au.
"It hasn’t been a good week at all for the Dees, but I’m absolutely pumped to sign for another three years after this year, and I couldn't be happier."
Grimes has played 55 games and was one of the key players coming out of contract at the end of this year.
No.1 draft pick Jack Watts is also out of contract at the end of the year as are free agents Colin Sylvia and Aaron Davey. Despite not having played senior football for nearly two years, emerging ruckman Max Gawn is also out of contract at the end of the season.
Coach Mark Neeld was full of praise for Grimes for his leadership during a difficult period and pleased with the faith his re-signing showed in the club's direction.
"It's says a lot about Jack Grimes and the way he is leading he player group along with Trenners (Jack Trengove) and the rest of the leadership group," Neeld said.
"He's a very good leader Jack and his leadership is developing every day he walks through the door at this place and for him to get on the front foot and come to the club, I'm in it for the long haul…it's a really good reflection on Jack."
