The Italian, who had been linked with the vacant job as Russia boss, began discussions on a new deal at the end of last season and has committed to a long-term future at the Etihad Stadium.
A club statement read: "Manchester City Football Club today are pleased to announce that a new contract has been agreed with manager Roberto Mancini.
"The deal, which runs until the summer of 2017, follows the club's most successful season in more than four decades, which concluded in the most dramatic of circumstances in the team's thrilling 3-2 win over Queens Park Rangers in May this year."
Source: PA
Source: PA