Rashford enjoyed his best season in a Manchester United jersey last term, scoring 30 times in 56 appearances across all competitions.
The 25-year-old was contracted to the Old Trafford club until the end of the 2023/2024 season but has seen enough improvement from Erik Ten Hag's side to pen fresh terms.
Rashford has scored 123 goals in 359 games since making a goalscoring debut against Midtjylland in the Europa League in February 2016.
"I joined Manchester United as a seven-year-old boy with a dream. That same passion, pride, and determination to succeed still drives me every time I have the honour of wearing the shirt," said Rashford after signing his new deal.
"I've already had some amazing experiences at this incredible club, but there is still a lot more to achieve and I remain relentlessly determined to win more trophies in the years ahead.
"As a United fan all my life, I know the responsibility that comes with representing this badge and feel the highs and lows as much as anyone. I can assure you that I will give everything to help the team reach the level we are capable of, and I can feel the same determination around the dressing room. I couldn't be more excited for the future under this manager."
Man Utd football director John Murtough added: "Ever since he joined our Academy 18 years ago, Marcus has epitomised what it takes to succeed as a Manchester United player. He is a brilliant talent but also humble, dedicated and driven.
"As he enters his prime years, we know there is still so much more to come from him, and we can see the hunger that Marcus feels to achieve the highest levels of success here at Manchester United. Working with Erik ten Hag and his coaches is the perfect environment for Marcus to continue to develop into one of the best attacking players in the world."
