As exclusively revealed by Goal.com last week, the 26-year-old's representatives have been in negotiations with City throughout the summer over a new £200,000-a-week deal for the player.
And with Spanish giants Real Madrid, who City meet in the Champions League on Tuesday, believed to be keen on bringing Silva to Santiago Bernabeu, the Premier League side have moved to ensure the playmaker joins a number of first-team stars committing their future to the club.
Speaking to the club's official website, Silva insisted the champions ambition was a key factor behind his decision to remain at Eastlands, with Roberto Mancini's men now eyeing European success.
“I’m very pleased because I’ve been here for two years now and I feel very happy here at the club, in the city and with all the people," he told the club's official website.
"So now I’m delighted to be extending my contract and being here really does feel just like home for me.
“We’ve won the Premier League title and two other trophies too, and the team is growing and we are now aiming at the Champions League and so that also is another reason to want to stay here.
"As I said, I feel very comfortable here and I want to try and win trophies like those. These last two years have gone very well and so let’s hope that the next five go as well or even better.
"The fans have always given me their support since I arrived here, and recently they‘ve been wanting me to sign, so hopefully this goes someway to thanking them for the affection they’ve shown towards me, something which also helped me decide to put pen to paper.”