"We are delighted that Ashley has signed a new contract," manager Louis van Gaal told the club's website. "Ashley is a very multi-functional player.
"He took to the wing-back position with great confidence and flourished on the wing throughout last season.
"Ashley is always very professional and has a great presence in the dressing room."
Young was part of the team that won the Premier League title in 2012-13, which was also manager Alex Ferguson's last season in charge.
The winger's impressive form saw him keep British record transfer Angel Di Maria out of United's starting line-up for most of last season.
"I am delighted to have signed a new contract. The spirit and motivation amongst this team is very high and we are all determined to make this a season to remember," Young said.
"All I have ever wanted to do is play football and to be able to continue to do that at the biggest club in the world means everything to me and my family."
(Reporting By Simon Jennings in Bengaluru; editing by Sudipto Ganguly)
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