The new deal also has an option to extend which would tie the 28-year-old Ecuador winger, who is currently on World Cup duty with his country, to United until June 2018.
Valencia said on www.manutd.com: "My time at Manchester United has been like a dream come true. To be the first Ecuadorian player to win the English Premier League was a very proud moment for me and for my country."
Valencia joined United from Wigan in 2009 and has made 191 appearances for the Red Devils, scoring 21 goals.
During his time at the club, Valencia has helped United lift two Premier League titles and the League Cup, and he is hoping to pick up more silverware under incoming manager Louis van Gaal.
Holland coach Van Gaal will take over at Old Trafford following the World Cup as the permanent replacement for David Moyes, who was sacked in April following a dismal first season which ended up with United finishing seventh place in the Premier League and out of the European places.
Valencia added: "I am so happy to have signed a new deal and am looking forward to working with Louis van Gaal. There is great team spirit within the club and we are all determined to get back to winning ways."
Ryan Giggs, who will be Van Gaal's assistant, welcomed the news that former El Nacional and Villarreal winger Valencia had committed his future to the club.
The most decorated player in United's history said: "I'm really pleased Antonio has signed a new contract. His contribution to the team since he joined the club in 2009 has been fantastic.
"Antonio is a very powerful player with great speed and versatility. He is very professional in his approach to training and I am delighted he has committed his future to the club."