Matic has been an indispensable member of Ole Gunnar Solskjaer’s starting eleven this year after he struggled to get into the team in the early part of the 2019/2020 season.
Injuries to Paul Pogba and Scott McTominay towards the end of 2019 offered Matic a way back into the team and he has duly taken advantage of the situation to nail down a regular starting berth.
His presence in the team has coincided in an upturn in form for Manchester United that has seen them go unbeaten in their last 16 games.
"I am very happy that I will continue to be part of this great club," 31-year-old Matic told the club's website.
"As a player, I still have a lot more to give and achieve in my career and to do that with Manchester United will be a huge honour.
"This is a really exciting team to be part of, we have a good balance of youth and experience within the squad and there is great comradery amongst the group.
"This is a key part of the season and we are playing well. We will continue to fight to finish the season on a high and make our amazing supporters proud."
Solskjaer added: "I am delighted that Nemanja has signed a new contract, I know his experience, professionalism and leadership will be invaluable to this young talented group.
"We have great strength in midfield and Nemanja's attributes are a key part of that. Nemanja has been here for three seasons now and really understands the values of playing for Manchester United.
"He remains hugely ambitious and determined which will be vital as we look to achieve our aims over the coming years."
Matic joined the Red Devils from Chelsea in the summer of 2017. He has made 27 appearances in all competitions this season, scoring one goal.