Mbappe's previous deal with the French champions would have expired this summer and he had been expected to join the Champions League finalists.
However, PSG have managed to convince the 23-year-old to pen fresh terms at the Parc des Princes.
Mbappe's contract extension was announced ahead of PSG's final home league game of the season against Metz on Saturday, which they won 5-0, with Mbappe scoring a hattrick to win the top scorer award with 28 goals.
'I would like to announce that I have chosen to extend my contract at Paris Saint-Germain, and of course I am delighted,' Mbappe said.
'I am convinced that here I can continue to grow at a club that provides everything necessary to perform at the highest level.
'I am also delighted to continue to play in France, the country where I was born, where I have grown up and where I have made my name.
'I would like to thank the President, Nasser Al-Khelaifi, for his trust, his understanding and his patience.
'I would also like to thank all the fans of Paris Saint-Germain, both in France and around the world, for their support, especially in recent months. Together, side by side and ambitious, we will make magic in Paris.'
Mbappe has won four Ligue 1 titles with PSG since joining initially on loan from AS Monaco in the summer of 2017.
