A fixture at centre back under coach Diego Simeone alongside Brazil international Miranda, the 27-year-old Godin has made a key contribution to Atletico's success since he joined from Villarreal in 2010.
"This is my home," he said on the club's website (www.clubatleticodemadrid.com).
"They make me feel amazing even though I am a long way from my country, from my home, from my friends," he added.
"We are building a group, strong and solid, based on togetherness, work and solidarity.
"That is not easy to achieve and shows how serious the club is and that they want to take this project forward. It gives all the players a lot of confidence."
King's Cup winners last season, Atletico have begun their latest La Liga campaign in imperious form with 10 wins in 11 matches and are second, a point behind unbeaten champions Barcelona.
(Reporting by Iain Rogers, editing by Alison Wildey)
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