Scott Bain says signing a contract extension with Celtic "lets me fully focus on getting fit and getting back in the team" ahead of Fraser Forster.
The goalkeeper, who signed a four-year contract in May 2018, is now committed to Celtic for a further year.
"It's something that's been in the works for a while, so I'm glad to finally have it finalised," he said.
Forster returned to Celtic on loan from Southampton after 27-year-old Bain dislocated a thumb in August.
The England goalkeeper has played 12 times since and is starting ahead of Bain's Scotland colleague, Craig Gordon.
Bain, who initially joined Celtic on loan from Dundee in January 2018, is back in training and hoping to add to his seven appearances this season.
"I've developed as a person and as a player here at Celtic," he told Celtic's website. "Being around people who want to make you better and train you to a high standard brings the best out in you.
"It's really enjoyable to be part of a team that's going for trophies and winning the majority of games. You have to thrive off that kind of pressure here. For me to be a part of that has been a dream."
Edinburgh-born Bain, who has three Scotland caps, has made 45 appearances for Celtic and says last season's Scottish Cup final, which secured a historic treble treble of domestic trophies, "is the highlight of my time here".
Bain becomes the second Celtic player to sign a contract extension within 24 hours after Scotland winger James Forrest also committed himself until summer 2023.