The NSW Blues have been named for the first game of the 2017 #Origin series.
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Petersen, who has scored six tries in his last two matches, is one of four players who had their futures secured with the 2001 runners-up.
Eels management stepped up talks with Petersen after he equalled the club tryscoring record with four against South Sydney a fortnight ago.
Queensland utility Daniel Wagon and injured forward Chris Armit also signed until the end of the 2005 season while rookie halfback Michael Witt will be at the Eels until the end of 2007.
Witt has been a revelation for the Eels since taking over from Paul Green, who is out with a serious facial injury.
Petersen, 23, was glad to settle down after a nomadic NRL career which took in stints at the now defunct Western Reds in Perth, Newcastle and North Queensland.
He joined Parramatta midway through last year and his form this season has been a rare high point for the struggling club.
"I've moved about a bit but I feel settled here."
Coach Brian Smith admitted Petersen was a fine prospect.
"He had a bad start to the year with a series of injuries but it's great to see him going well now he's fit again."