The New York Islanders officially year contract extension on Wednesday.
No financial terms were disclosed, but multiple outlets reported it is worth $11 million.
Nielsen has registered nine goals and 16 assists in 52 games this season, his sixth with the Islanders, who selected the Dane in the third round of the 2002 NHL Entry Draft.
The 27-year-old posted career highs across the board in 2010-11 with 13 goals, including seven shorthanded, 31 assists, 44 points and a plus-13 rating.
In 289 career games, Nielsen has totaled 46 goals and 99 assists.
The Islanders also announced that defenseman Dylan Reese will miss 4-to-6 weeks with a left MCL knee sprain.