Aguero, City’s record signing after he joined from Atletico Madrid in 2011, has scored 47 goals from just 69 starts and has now committed his future to the club.
The Argentine said: “I'm very happy at City and I feel very appreciated. It's been barely two years since I've arrived and sometimes I feel like I've been here for all my life.
"I have a fantastic relationship with the fans, and that always reminds me of our title and that goal against QPR. I can never forget that moment.
“Now I am looking forward to next season and pushing hard to win the title again.”
The 24-year-old famously scored the winning goal against QPR that sealed the Premier League title for City in 2012.
Media speculation had repeatedly linked Aguero with a move to La Liga side Real Madrid, but he has become the latest City player after Gael Clichy, Yaya Toure and David Silva to extend his contract.