Phelan, who was Sir Alex Ferguson's assistant from 2008 to 2013, returned to the club when Ole Gunnar Solskjaer was initially appointed caretaker manager in December 2018.
A club statement by United confirming Phelan's new contract read;
"Manchester United assistant manager Mike Phelan has extended his contract with the club.
"The former Reds midfielder has agreed a fresh deal until June 2024 after returning to the club when Ole Gunnar Solskjaer was initially appointed caretaker manager in December 2018.
"He was moved to his current role in the following May, after previously being first-team coach.
"The 59-year-old has a wealth of experience and was, of course, a much-valued member of Sir Alex Ferguson's coaching team.
"As a player, he made 146 appearances for United after signing from Norwich City in 1989, before joining West Brom in 1994. He was at the heart of Sir Alex’s first trophy-winning team, with honours including the 1990 FA Cup, 1991 European Cup Winners’ Cup and 1993 Premier League title."
Being Solskjaer's assistant since the Norwegian was appointed, Phelan has helped with Solskjaer's 'cultural reboot' of the club and guided the Red Devils to a second place position last season.
Phelan's boss Ole Gunnar Solskjaer is currently under pressure after the side drew with Everton at Old Trafford as some section of the fans want him to be sacked.
United are fourth in the Premier League with 17 points after seven games, same points with Everton.
The 2017 Europa League winners will return to action after the international break with a trip to Leicester City in the Premier League on Saturday 16 October.
