Pep Guardiola’s current deal had just seven months remaining and the new contract ends speculation over his future as club seek to regain Premier League title from Liverpool.
Guardiola, 49, had just seven months left on his previous contract but the new deal, which runs to the summer of 2023, would stretch his City stay to seven years from his arrival in 2016.
City have won six major trophies, including two Premier League titles, since Guardiola took over.
It is already Guardiola’s longest stay as a manager, after four years in charge of Barcelona and three at Bayern Munich.
“Ever since I arrived at Manchester City I have been made to feel so welcome in the club and in the city itself – from the players, the staff, the supporters, the people of Manchester and the chairman and owner,” Guardiola said.
“Since then we have achieved a great deal together, scored goals, won games and trophies, and we are all very proud of that success.
“Having that kind of support is the best thing any manager can have. I have everything I could possibly want to do my job well and I am humbled by the confidence the owner, chairman, Ferran [Soriano] and Txiki [Begiristain] have shown in me to continue for two more years after this season.
“The challenge for us is to continue improving and evolving, and I am very excited about helping Manchester City do that.”
Guardiola had been non-committal over his future at the club, saying in September that he was waiting to see if he “deserved” a new deal.
But City remained desperate to secure Guardiola to a long-term contract.
City chairman Khaldoon Mubarak said: “It is testament to the qualities of the man that Pep Guardiola’s passion and intelligent approach are now woven into the very fabric of the football we play and our culture as a club.
“That impact has been central to our success during his tenure and it is why I am delighted that he shares our view that there is so much more to be achieved both on and off the field.
“Pep’s contract extension is the natural next step in a journey which has evolved over many years. It is a product of the mutual trust and respect that exists between him and the entire club. It also goes to the stability and creativity at the heart of our football operations.
“Importantly it is a validation of the football structure and philosophy that has been built over more than a decade and to which he has contributed so much.“
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