The Italy international, who joined the French champions from Pescara in 2012, had been linked with a move to Real Madrid this summer.
However, the 21-year-old has now committed his immediate future to the Ligue 1 club.
"When I think about my career, I only see myself at Paris Saint-Germain. I want to continue winning trophies with this club, while continue to improve as a footballer alongside truly world-class players," he told PSG's official website.
Verratti has won two league titles and the Coupe de la Ligue during his two years at PSG.