Neuer’s previous deal was set to expire at the end of the 2020/2021 season and deadlock in extension talks had led to suggestions that the 34-year-old would depart Allianz Arena when his contract comes to an end.
Neuer joins manager Hansi Flick as well as first team stars Thomas Muller and Alphonso Davies in signing new contracts at the German champions in recent months.
Neuer made his 38th appearance of the season on Sunday when Bayern Munich beat Union Berlin 2-0 to mark the resumption of the Bundesliga in the wake of the global Coronavirus crisis.
"I feel very comfortable and at home in Bavaria,” Neuer told Bayern’s official website after penning fresh terms.
"FC Bayern are one of Europe's top football clubs.
"During the weeks of the shutdown for the coronavirus pandemic, I didn't want to make a decision because nobody knew if, when and how Bundesliga football would continue.
"It was important for me to continue working with our goalkeeping coach Toni Tapalovic. Now this has been resolved, I look to the future with great optimism."
CEO Karl-Heinz Rummenigge added: "FC Bayern are very happy Manuel has extended his contract until 30 June 2023.
"Manuel is the best goalkeeper in the world and our captain."
Since moving to Bayern Munich from Schalke nine years ago, Neuer has won seven Bundesliga titles, four DFB-Pokals, one UEFA Champions League among numerous honours while also tasting glory at international level by helping Germany to World Cup glory in 2014.
Bayern Munich have already struck a five-year deal with Schalke 04 goalkeeper Alexander Nubel to arrive on a free transfer at the end of the season.
