Fernandes' new deal includes the option for a further year.
The 27-year-old old has arguably been Manchester United's most impressive player since joining from Sporting Lisbon in January 2020, winning the club's player of the season in his first six months.
Fernandes has made 117 appearances in all competitions, scoring 49 goals and providing 39 assists.
He has won the Premier League's player of the month four times since his arrival in England.
Fernandes told the club's official website: "From the moment that I joined Manchester United, I have had a special relationship with the club and our amazing fans. I grew up watching this team, dreaming of getting the chance to play here one day.
"That dream is now a reality and an honour.
"Even after two years, it still feels amazing to step out at Old Trafford, to hear the fans sing my song and to score in front of the Stretford End. It is a true privilege to wear this shirt and to fight for our incredible club.
"There is so much more that I want to achieve here, and I know that is the same for the rest of the squad and staff. More than anything, we want to give the fans the success that they deserve.
"We have shared some great moments over the last years, but the best is yet to come from myself and this team."
John Murtough, football director, added: "Everyone is well aware of Bruno's importance to Manchester United. His goals and assists record is phenomenal and he has performed remarkably consistently since he joined the club.
"Bruno's work-rate, dedication and fantastic attitude are exactly what we want from a Manchester United player. He is the ultimate professional with many fantastic attributes to drive the high standards required to play for this great club.
"Bruno, like everyone across the football club, remains hugely ambitious and determined to deliver sustained success on the pitch to get us back to challenging for titles."
Fernandes scored both goals as Portugal defeated North Macedonia 2-0 on Tuesday to qualify for the 2022 FIFA World Cup in Qatar.
