"He's under contract and we have an option on him for next year and the year after," Red Bull team boss Christian Horner told Sky Sports during practice for the Austrian Grand Prix.
"He'll be in a Toro Rosso again next year."
Sainz had told reporters on Thursday that he was unlikely to stay for a fourth season and was open to offers.
The 22-year-old, who has eclipsed Russian team mate Daniil Kvyat this season, is seen as a rising star and has been linked in media speculation to a number of other teams.
"I don't know where he thinks he'll be," said Horner.
"He only got a chance in Formula One because of Red Bull investing in him in the junior years. It's a little bit disingenuous to be making comments like that. A lot of investment goes into these guys to give them the opportunity."
Sainz appears to have no chance of moving up to Red Bull next year since the former champions have Australian Daniel Ricciardo and Dutch teenager Max Verstappen locked in.
Horner said there was no change of plan there and "both drivers will be with us 100 percent."
Toro Rosso, established as a feeder team for Red Bull, has a history of moving young drivers upwards or out. Those who have graduated include four-times world champion Sebastian Vettel.
Others have been less fortunate, their Formula One careers effectively ended after being cast out of the Red Bull fold.
Kvyat is in the rare position of having been promoted and then demoted again in a swap with Verstappen, who won in Spain on his Red Bull debut last year.
"No-one has had a fourth consecutive year at Toro Rosso and I’m ready to take a step," Sainz said after Horner's comments.
"I appreciate a lot the people working in Toro Rosso, it’s a great group of professionals and the Toro Rosso door is open to me. It’s a nice problem to have.
"My number one target is to be in Red Bull as soon as possible. That has been my dream since I was 15 and they picked me up and that’s not going to change."
(Editing by John O'Brien and Alexander Smith)
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