The Scotland prop, who has won 40 caps for his country, made his debut for Edinburgh in a friendly against the touring ACT Brumbies in November 1997 and has since gone on to represent the team in 228 competitive fixtures.
The second oldest member of the squad, behind 31-year-old Chris Paterson, Jacobsen says he enjoys being a senior player and believes the current Edinburgh playing staff have the potential to win trophies.
Jacobsen said: "I'm delighted to have signed another deal and happy to commit myself to Edinburgh for another three years.
"I have played for Edinburgh throughout my whole career since I was 15. It has always been really important to me and I'm just glad to be able to keep that going.
"Another reason for staying is that I want to win trophies. For me, there has been a gradual improvement at Edinburgh over the past 10 years.
"I think the team has become more consistent, especially over the past two seasons, and more competitive away from home.
"If we keep on improving then there is every reason we can win trophies.
"I believe we have got the players at Edinburgh, who are capable of achieving success and I'm excited to be a part of that."
Jacobsen's rapport with the Edinburgh supporters is well known and he is a universally popular figure with everyone associated with the club.
The 31-year-old front row forward praised the backing he has received from the fans and says he wants to repay them by helping the team challenge for honours.
He added: "I love playing for Edinburgh and I've been very lucky because the fans have always been very good to me.
"The crowds are growing and we are fortunate that we have a core of loyal supporters."
Head coach Rob Moffat wholeheartedly endorsed the news which sees another valuable experienced player commit to Edinburgh following captain Mike Blair's new contract.
Moffat said: "He has been a great servant to Edinburgh and what you see is what you get with Chunk (Jacobsen).
"His durability and commitment to the Edinburgh cause has been a real asset to the team over the past decade and we look forward to seeing him continue to contribute over the next three years.
"He is a good influence on some of the younger props coming through. He can pass on his vast experience to them, but he still wants to hold down that number one position.
"We have got a lot of young, developing players coming through and we are happy that one of senior players is staying with Edinburgh and he still has a number of years ahead of him at the top level."
Chief executive Nic Cartwright echoed Moffat's view and believes Jacobsen has been a standard bearer for professional rugby in the capital over the past decade.
Cartwright said: "Allan embodies what this club is all about; he has poured his heart and soul into making Edinburgh successful which is why he is so popular with team-mates and supporters alike.
"He is both loyal and ambitious and those traits are key ingredients behind any successful rugby team.
"Sometimes you forget that Allan has played over 200 games for Edinburgh because he approaches every forthcoming match with the same boundless enthusiasm and desire to succeed as a player making his debut.
"We felt it was important to secure the services of another experienced player and we are really pleased that Allan has agreed to continue his rugby career with Edinburgh.
"His determination has become engrained into the fabric of what Edinburgh Rugby is all about and we look forward to seeing him in the Black and Red for many seasons to come."
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