The contract extension means the 21-year-old Kiwi international will remain with the Panthers until at least the end of the 2020 season.
“The decision to re-sign with the Panthers was an easy one to make,” Watene-Zelezniak said.
“Penrith has been my home since I was a kid and it has always been my dream to play first grade for the Panthers.
“I consider myself very lucky to be able to live that dream at such a fantastic club.”
A local junior, Watene-Zelezniak progressed through the grades at the Panthers and was a member of the club’s premiership-winning NYC side in 2013.
He made his NRL debut the following year and has gone on to score 27 tries in 54 games with the club.
“Dallin is one of the many great stories emerging from the Panthers,” Executive General Manager Rugby League Phil Gould AM said.
“He is a wonderful person and such a valuable member of our NRL squad.
“We are thrilled Dallin has committed to another three seasons with our club and we are truly lucky to have him here at the Panthers.”