Valencia, who signed from Wigan Athletic in 2009, has scored 21 goals in 191 appearances for United, and the right-sided player has described his time at the club as a "dream come true".
The 28-year-old told the club's official website: "My time at Manchester United has been like a dream come true. To be the first Ecuadorian player to win the English Premier League was a very proud moment for me and my country.
"I am so happy to have signed a new deal and I am looking forward to working with Louis van Gaal. There is a great team spirit within the club and we are all determined to get back to winning ways."
Valencia is currently representing Ecuador at the World Cup finals in Brazil.