The highly-rated midfielder joined Celtic at 10 years old in 2013 and made his Under-20s debut against Hearts in October 2016.
The deal ties him to the Scottish champions until at least 2021.
“It means a lot to me to start my professional career at Celtic,” he told the official Celtic website.
“I came here at a young age and, after all the stuff me and family have been through together, it’ll be good to make them proud.
“My goal is to play for the first team. As soon as I can, I’m going to try to get into the first team, 100%.
“In the reserves, every training session, every game – it’s all to prove myself to the manager that I can play in the first team.”
As a 13 year old, Dembele made his international debut in 2016 when he played for Scotland U16s in the Victory Shield.
However, a month later he featured in an England U15 side that beat Turkey 5-2 at St George’s Park.
Dembele is also eligible to play for Ivory Coast and will not be tied to a national team until he makes a competitive senior appearance.
“Getting attention at a young age has been hard, but I’ve obviously had my family to help me through that,” he added. “You need to be strong mentally, you need to stay grounded and you just need to get on with everything that you do on a daily basis.
“Seeing players come through the academy and into the first team gives you hope, because you know they’ve taken the same path.
“That means you’ve got a chance to make it into the first team if you work hard and give it your all.”
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