The England-born flanker qualifies for Wales through his grandfather and represented the nation at under-20 level.
In his two years at Ospreys the Yorkshire Carnegie Academy product has made 17 appearances, scoring one try in the process, but wants to be a more regular feature in Steve Tandy's match day squads.
"I'm really pleased and quite excited" he told the Ospreys website.
"To get the vote of confidence from the coaches is always a big thing.
"Week in, week out, you've got to try and perform, and thankfully, I performed at the end of the season and got a bit of game time as a result.
"I want to continue striving to be consistent in my performance, that's something the coaches have said I need to maintain.
"I've had a few good games at the end of the season but I'm still a long way off from where I want to be.
"I'll just get my head down and keep working."
Tandy welcomed the youngster inking his new deal and said he was impressed with Cracknell's development at the region.
"He earned his chance in the latter part of the season and you have to say he was selected ahead of some big players on merit," said the head coach.
"The challenge for him now is to maintain those standards consistently, we feel there is still a lot more to come from Olly as he continues to develop and are extremely pleased that he sees our environment as the best fit for him to do that."
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