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Matic looked to be on the way out of the club in January having reportedly fallen out of favour with manager Ole Gunnar Solskjaer.
But on Monday the 31-year-old, who moved from Chelsea to Manchester in 2017 after three-and-a-half years at Stamford Bridge, signed a new deal having impressed ever since in the United midfield.
"I am very happy that I will continue to be part of this great club," Matic told the club's official website.
"As a player, I still have a lot more to give and achieve in my career and to do that with Manchester United will be a huge honour.
"This is a really exciting team to be part of, we have a good balance of youth and experience within the squad and there is great camaraderie amongst the group.
"This is a key part of the season and we are playing well. We will continue to fight to finish the season on a high and make our amazing supporters proud."
The Serbia international has played 114 times for United, scoring four goals.
Solskjaer added: "I am delighted that Nemanja has signed a new contract, I know his experience, professionalism and leadership will be invaluable to this young talented group.
"We have great strength in midfield and Nemanja’s attributes are a key part of that. Nemanja has been here for three seasons now and really understands the values of playing for Manchester United.
"He remains hugely ambitious and determined which will be vital as we look to achieve our aims over the coming years."
United are fifth in the Premier League on 55 points from 33 games, two behind fourth-placed Chelsea who they meet in the FA Cup semi-final at Wembley on July 19.
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