The 25-year-old follows his fellow Lions Charlie Hodgson, Mark Cueto and Andy Titterrell, who all signed new deals with the Premiership club in recent months.
England international Sheridan, who joined Sale from Bristol two years ago, has agreed an extended contract until May 2008.
He is set to start in Friday night's Premiership opener against Edgeley Park visitors Newcastle.
"Andrew is the best loosehead in this country, and will soon, I am sure, become the best in the world," said Sharks rugby director Philippe Saint-Andre.
"We are a very ambitious club and we want to hold on to our best players."
Sheridan made five appearances on the Lions tour of New Zealand earlier this summer, including starts against New Zealand Maori and Manawatu.