Gabriel Jesus, 21, has scored 24 goals in 53 appearances since arriving from Palmeiras in January 2017 and has put pen to paper on a new deal until 2023.
“I would like to thank the fans for the welcome and for how well they have treated me,” he told the club website.
“I can say that it was the best decision I’ve made in my life to come to Manchester City, because whilst I’m here I’m improving as a professional and as a person.
“Also thanks to the club for being so organised and focused since I arrived. Pep [Guardiola] had an important role in my signing, but also the club.
“City is a huge club and it is getting bigger and bigger, so I just want to say thanks for everything. I hope that I can keep making the fans happy.”
Director of Football Txiki Begiristain said: “Gabriel is undoubtedly one of the best young forwards in world football, so to have him commit his future to us is a huge boost.
“There’s so much variety in his game. I know how much Pep enjoys working with him and I am really looking forward to watching his development in the coming years.”