The 18-year-old, who has attracted interest from Arsenal and Chelsea, made 28 appearances in all competitions last season
The 18-year-old made 28 appearances in all competitions last season and has attracted interest from Arsenal and Chelsea.
Goal reported in January that Shaw had committed to the deal at the start of the year, and the full-back insists he is glad to commit his long-term future to the club.
"I'm very pleased to have finally signed it," Shaw told the club's official website.
"I committed myself back in January, and I'm glad everything has been sorted out.
"I've been getting a lot of questions about my future, but all of the Saints fans will have known that I committed my future in January.
"I've been here since I was eight and I've loved every single moment of it. I want to stay at this club, and signing this contract means I'm here for another five years."
Southampton manager Mauricio Pochettino is buoyed by Shaw's decision to sign a new deal with the club and expects the defender to be an influential figure in his side next term.
"This news merely confirms what we have known for some time – that Luke sees Southampton as the best place for him to develop," he said.
"Luke made a tremendous impact during his first season as a professional, and he is still growing and improving with each game he plays and every training session he takes part in.
"It is very clear that he has a huge future ahead of him, and we are delighted that he shares our vision for his growth over the next few years.
"We hope that Luke's new contract will bring to an end any remaining speculation about his future, and that he can now focus fully on what promises to be an exciting season.
"He has returned for pre-season training in excellent shape, and we are expecting big things from him in the coming campaign."