McCarthy, who turns 22 today (September 8) joined the team as a neo-pro in 2013 and has impressed team manager Bjarne Riis in the two-seasons that he has ridden for the team.
"For me it was obvious Jay McCarthy should continue," Riis said on the team website. "He proved in the last week of the Giro d'Italia that he could achieve the level we had signed him for a couple of years ago. He had a number of very good stages in the Giro, and after that he went on performing well."
McCarthy made his grand tour debut at the 2014 Giro and came close to victory on stage 17 to Vittorio Veneto when he finished in third place.
Pleased with his extension, McCarthy said he was looking forward to finishing the season strongly and repaying the team's faith.
"I'm, of course, very excited about continuing next year," he said. "I feel that I've had a good development during the last two seasons and I learned a lot from racing with my teammates as well as receiving great support and guidance from the team's staff.