Winger Valencia joined United five years ago and the new agreement means he will be part of new manager Louis van Gaal's efforts to restore the team's fortunes after they finished only seventh last season.
"I am so happy to have signed a new deal and am looking forward to working with Louis van Gaal," said Valencia, who led Ecuador to a 2-1 World Cup win over Honduras on Friday night.
"There is great team spirit within the club and we are all determined to get back to winning ways."
Valencia, who is 28, gave a subdued display against Honduras. Ecuador coach Reinaldo Rueda suggested that the problems at United last season had affected his form.
There had been speculation in the British media that Premier Leagur rivals Liverpool were interested in signing Valencia, who has played 191 games for United, scoring 21 goals.
United assistant manager Ryan Giggs welcomed the agreement, praising Valencia's attitude and contribution to the club.
"Antonio is a very powerful player with great speed and versatility," said Giggs.
Valencia's new deal includes an option to extend it until June 2018.
(Writing by Keith Weir, editing by Sudipto Ganguly)
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