The extension will see it continue as the master toy licensee for the Ben 10 franchise through 2012.
The original deal was signed in 2005 and includes rights for action figures, playsets, role-play items and more in all territories.
"As master toy licensee and launch partner for Ben 10, Bandai has been instrumental to our success in making Ben one of the most popular boys' action brands on the global market today," said Christina Miller, Cartoon Network's senior Vice-President.
"This year, Ben 10 enters its fifth year at retail, marking a major milestone for us, and as we prepare for the next phase of the brand's lifecycle, we're thrilled to continue our collaboration with Bandai to continue its success for years to come."
"Our Ben 10 toy line success starts with the great stories and immersive adventures showcased on Cartoon Network," added Mark Schaffner, executive vice-president of toys at Bandai.
"We believe the Bandai and Cartoon Network collaboration will continue to yield industry awards, consumer accolades and fan devotion by delivering quality entertainment that sparks imagination and engagement."