The 25-year-old's new deal will keep him at Allianz Arena until 2018, and the Germany international says he couldn't be happier to be prolonging his stay with last season's treble winners.
"Bayern are one of the great clubs in world football," he told the club's official website.
"To play here is not only a job, it is an honour.
"I want to achieve a lot with our team in the years to come."
Bayern CEO Karl-Heinz Rummenigge also revealed his delight at the news, citing Boateng as a key player for Pep Guardiola's team.
"He is one of the major players at Bayern," he said.
"For this reason it was a natural fit that we have endeavoured to ensure a contract extension."
Boateng moved to the Bavarians in July 2011 after a short spell with Manchester City and played in his side's 3-2 Champions League defeat to his former club on Tuesday.
He has made 106 appearances for die Roten, and has won 36 caps for Germany since his debut in 2009.