The 24-year-old has fought off the challenge of Shay Given to establish himself as first choice at Eastlands.
He told the club's official website: "I'm absolutely delighted to have signed a new deal and it is a very exciting time to be a City player.
"I can't think of myself being anywhere other than City and it really feels like home. I feel very privileged to be staying here for another five years.
"I've got a lot of love for this club, the way we're moving forward and for the fans who have been fantastic towards me from day one."
Hart joined City from Shrewsbury for ?600,000 in 2006 and has also taken over the position as England first-choice goalkeeper.
He set a new club record for clean sheets last season, and has paid tribute to Given's influence - the Republic of Ireland stopper has now moved to Aston Villa.
Hart added: "When I signed from Shrewsbury it was always my aim to become the number one here and I was prepared to do anything to achieve that, including going out on loan a few times to prove my worth.
"Shay's influence on me has been massive and being able to work alongside him has brought my game on tremendously.
"I've lost a close friend and a fantastic team-mate but I'll keep in touch and talk with him on a regular basis."
Source: Team Talk
Source: Team Talk