The former Manchester City youngster originally agreed a one-year deal with The Lions after joining Kenny Jackett's side last year and has impressed the manager with his performances not only in the reserves but also with the first team, scoring twice in this season's FA Cup competition.
"Ashley came here with plenty of talent and potential," commented Jackett. "But over the past few months he has worked hard on his game and developed physically as well. I believe he will be a real asset to this club in the coming months and years."
For his part, Grimes was more than happy to extend his stay. "I'm delighted to have signed," he said. "I'm loving it here and I just want to enjoy playing football and help Millwall be successful."