With 29 career games to his name, the 24-year-old was out of contract at the end of this year, but some impressive showings at the start of the season has guaranteed his future at the Demons for now.
"Being out of contract, it was a relief to know that the club wants to keep you. I'm very happy to get it done now, rather than at the end of the year," Spencer told melbournefc.com.au.
"The coaching staff said they had seen enough of the list to offer certain blokes contracts and I was one of those guys.
"They (the club) approached my manager and I was ecstatic with that news. It came about pretty quick and I was delighted with the outcome."
Demons football manager Josh Mahoney told AFL.com.au Spencer's signing was aimed at maintaining depth in the club's ruck stocks.
"You really need a number of ruckman on your list and Jake was able to show earlier in the year that he's really improved as a player," Mahoney said.
"He trains hard and he's competitive. We think by having Spencer, Max Gawn and Mark Jamar we're putting together a strong ruck division."
The 203cm big man played the opening five games of this season, before an ankle injury forced him onto the sidelines.
Spencer is another four to five weeks away from making a return.
"I had a positive start to the season and played some early games and then it was pretty frustrating and disappointing in the last four or five weeks," he said.
"I've started running now, so hopefully I can get it right and finish off the season well."
Spencer's signature follows the three-year deal handed to Lynden Dunn, announced by Melbourne on Thursday.
Twitter: @AFL_BenGuthrie
