The Ecuador captain, who is currently representing his country in the FIFA World Cup, joined United from Wigan Athletic five years ago and has gone on to make 191 appearances for the Old Trafford outfit.
Valencia had just one year remaining on his previous deal, but will play his part in a new era under Louis van Gaal after putting pen to paper on a contract that includes an option to extend until June 2018.
The 28-year-old told the club's official website: "My time at Manchester United has been like a dream come true. To be the first Ecuadorian player to win the English Premier League was a very proud moment for me and for my country.
"I am so happy to have signed a new deal and am looking forward to working with Louis van Gaal. There is great team spirit within the club and we are all determined to get back to winning ways."
United assistant manager Ryan Giggs welcomed Valencia's decision to remain at Old Trafford.
He said: "I'm really pleased Antonio has signed a new contract. His contribution to the team since he joined the club in 2009 has been fantastic.
"Antonio is a very powerful player with great speed and versatility. He is very professional in his approach to training and I am delighted he has committed his future to the club."
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