The Norway Under-21 international has yet to make a first-team appearance for Roberto Mancini's side yet but has put pen to paper on a new two-year deal with the club
The Norway Under-21 international, who joined City from Skeid in 2008, is still yet to make his competitive debut for the first team under Roberto Mancini but will now remain at the Etihad Stadium until 2014.
He has previously been named as a substitute for a 2010 Europa League clash against Juventus and featured in Saturday's friendly loss to Al Hilal in Innsbruck.
"I wasn't sure what was going to happen towards the end of last season or what City were thinking so it was great to be offered a new deal," Elabdellaoui told the club's official website upon signing the contract.
"I didn’t know if I'd be on the pre-season tour or not so I was really happy to be included in the party because it is really good to be around the senior players that are here in Austria and things couldn’t be going better.
"I'm enjoying training, feeling sharper every day and it was great to get a run out against Al Hilal on Friday evening. We have two more games left on this tour and I hope I can be involved in those matches, too."
Elabdellaoui spent part of last season on loan at Norwegian Premier League side Stromsgodset, where he scored one goal in 12 appearances.
He is set to join Dutch side Feyenoord on a further season-long loan next term.