The winger-turned-full-back has the option of a further 12 months beyond that after impressing manager Jose Mourinho.
"It is no secret that I had been an admirer of Antonio's long before I joined the club," said the Red Devils boss.
"I knew what a fantastic player he was and he has not disappointed me on that front.
"However, what I could never have imagined was what a great person he is.
"I know I have said this before but I truly believe it is a real privilege for us to have such a good player and such a good man.
"I am delighted he has extended his contract."
Valencia, 31, signed for United in June 2009 and has since won two Premier League titles, one FA Cup, two League Cups, the Europa League and three Community Shields.
Having arrived as a winger, he has been utilised by Mourinho as an attacking right-back, having been preferred ahead of £12.7million signing and specialist defender Matteo Darmian.
"Manchester United has been my life since 2009 and I am absolutely delighted to have signed a new contract," said the Ecuador international.
"Wednesday evening provided the one trophy this club had never won and it was a true honour for me to captain the team for the (Europa League) final.
"I would like to thank the manager for the confidence he has given me this season and I am sure that we will be challenging on all fronts next season.
"I would also like to say a big thank you to my family, my team-mates and, of course, the fans for their amazing support."
