The winger, who is representing Ecuador at the World Cup and had a year left to run on his contract, is now tied to the club until 2018 and is the first player to extend following Louis van Gaal's appointment as manager.
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"I'm really pleased Antonio has signed a new contract. His contribution to the team since he joined the club in 2009 has been fantastic," Giggs told the club's official website.
"Antonio is a very powerful player with great speed and versatility. He is very professional in his approach to training and I am delighted he has committed his future to the club."
Valencia added: "My time at Manchester United has been like a dream come true. To be the first Ecuadorian player to win the English Premier League was a very proud moment for me and for my country.
"I am so happy to have signed a new deal and am looking forward to working with Louis van Gaal. There is great team spirit within the club and we are all determined to get back to winning ways."