Koke, 22, is one of the most promising of an emerging crop of Spanish central midfielders, and together with 29-year-old right back Juanfran helped Atletico win a first La Liga title in 18 years and reach the final of the Champions League last season.
"The two players are key parts of the red and whites' recent successes and their contract extensions are great news for our club," Atletico said on their website.
Koke, who made two appearances in Spain's failed campaign at the World Cup finals in Brazil and is a product of Atletico's youth academy, was reportedly a target for a number of Europe's top clubs.
(Writing by Iain Rogers, editing by Stephen Wood)
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