The England international, who became the most expensive teenager in history when he moved to Old Trafford from Southampton in 2014, has been rewarded after becoming a key player for Erik ten Hag (52) in the Dutchman's early months in charge.
"Nine years ago, I signed for this amazing club, and I'm thrilled to be extending my stay," Shaw, who has made 249 appearances for United, told the club's website.
"I've grown immensely since coming to Manchester all those years ago, both as a person and as a player; I know what is needed to succeed at a club like this.
"We're at the beginning of our journey under the manager and his coaching staff. We've been successful already this season, but we want much more. There's a great opportunity to create something special here, and I'm going to give everything to be part of that."
Shaw was part of the United side that won the League Cup in February to end a six-year trophy drought.
The Red Devils are in the hunt for more silverware as they face Sevilla in the Europa League quarter-finals and Brighton in the last four of the FA Cup.
But three games without a win in the Premier League has seen them drop outside the top four.
United football director John Murtough said: "Luke is a massively important player to the squad and has grown into one of the best defenders in the world.
"He has been at the club for nearly a decade and understands the expectations for success, and the hard work, commitment and high standards required to achieve it."
