The 30-year-old joined the Red Devils on a free transfer in the summer of 2015, and made 18 appearances in all competitions during the 2016-17 campaign, including all 12 of his team's matches in the Europa League.
Romero is still considered as understudy to David de Gea at Old Trafford, but Argentina's number one has been handed a contract until the summer of 2021 after impressing last term.
"I am delighted to have signed a new contract. Who wouldn't want to be at the biggest club in the world? We have great goalkeepers here and we are always learning from each other," he told the club's official website.
"Of course, it was a very proud moment for me and my family to be part of the Europa League final, and I am looking forward to helping the team build on last season's success in 2017-18."
United boss Jose Mourinho added: "Sergio is a great goalkeeper and professional. He had a good season and outstanding performances, especially in our Europa League success. Sergio deserves his contract, and for Manchester United to have Sergio and David is amazing in such an important role."
Romero will play 45 minutes of the club's pre-season clash against Real Salt Lake on Monday night.