The 2012 premiership player, who finished second in Norm Smith Medal voting behind Ryan O'Keefe in September's Grand Final win over Hawthorn, is expected to remain in the Harbour City despite his Victorian roots.
Hannebery grew up in Melbourne, attended Xavier College and played for TAC Cup side the Oakleigh Chargers.
"The club has looked after him really well since they drafted him as a bottom-aged player back in 2008. He loves the club and everything it stands for," Hannebery's manager Nick Gieschen told News Limited.
"There's a great culture up there, he's settled and he's obviously really close with his teammates.
"He's excited to stay at Sydney to continue to improve his football and help them push towards continued success over the next few years."
The 22-year-old has played 79 games for the Swans since being drafted in 2008 and won the 2010 NAB AFL Rising Star award.
Dan Hannebery is a midfielder in NAB AFL Fantasy. He averaged 81.86 points in 2012. Register your team at our AFL Fantasy Hub .
Jennifer Phelan is a reporter for AFL Media. Follow her on Twitter @AFL_JenPhelan.
