Walker had entered into the final year of his contract at the Etihad Stadium and attracted interested from Bayern Munich this summer.
However, despite losing his starting spot briefly during the 2022/2023 season and manager Pep Guardiola questioning Walker's suitability to his new defensive system, the England international has worked his way back to earn this new deal.
The 33-year-old joined Man City from Tottenham Hotspurs for £45m in the summer of 2017 and has won 13 major trophies in his time at the club, including the treble last season.
“I’m thrilled to sign a new deal. My future is with Manchester City and that is the best thing for me,” said Walker.
“I’ve enjoyed every single moment of the past six years at this fantastic club.
“The treble-winning season is one I will never forget and we’re ready to go again and try to win more trophies.
“We’ve got to demand that. We’ve set the bar and each year it’s how do you get better? How do we get better? We seem to be doing that each year.
“We’ve probably gone to the top of the top where there is only down because are we going to go and win a treble again? Who knows? You know, we could do.
“The odds say that we’re not going to, but we need to make sure that we’re there competing in the later stages in all competitions and fighting for the silverware.
“But I think one thing that we’ve done really well here is we take one game at a time. We don’t plan for the future. We plan for the present and the present starts on Saturday against West Ham.
“I am delighted to continue at a club that competes for trophies every year and I can’t wait to see what the next few years bring.”
Director of football Txiki Begiristain added: “He is an outstanding footballer and his speed, strength and experience make him such an important member of our squad.”
“For me, he is the best right-back in the world, a player with a unique set of attributes. He brings a very special dynamic to our team.
“Kyle has been a huge part of our recent success, and we are confident that he will help us compete for trophies in the upcoming seasons.”
