The England defender, who joined the club from Everton in a £47.5million deal in 2016, is now committed to City until 2026.
The new deal rewards Barnsley-born Stones for a past year in which he has rejuvenated his career, moving from the periphery of Pep Guardiola’s side to playing a key role in their latest title success.
“I couldn’t be happier,” said Stones, 27. “I love being part of this squad. There are so many quality players here and I know we can continue winning trophies, which is my main focus.
“Working with the manager is a dream – he has taught me so much about the game and I feel like I learn something new every single day.
“This is the best place for me to play my football and fulfil my ambitions.”
Stones, hampered by form and fitness issues, fell down the pecking the order during the 2019-20 campaign and appeared to be facing an uncertain future last summer.
Yet he remained at the Etihad Stadium and took full advantage of opportunities early last season to reclaim a place in the side. He went on to form a solid partnership with Ruben Dias as City regained the Premier League title.
His performances also earned him an England recall and he was a firm fixture in the side that reached the Euro 2020 final this summer. Stones feels he has reaped the rewards for a decision to transform his lifestyle. He said: “It was just doing more training, more gym, finding little details with food or recovery, anything I could find to improve I tried to improve on.”