The Spaniard has already clocked up more than 70 appearances for City since he signed from Valencia in July 2010.
And the 26-year-old, who last season helped the club win the league title for the first time since 1968, agreed a new deal which will run until the summer of 2017.
“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,” said Silva.
“So now I’m delighted to be extending my contract and being here really does feel just like home for me.”
The news comes ahead of Tuesday night’s Champions League clash away to Real Madrid at the Santiago Bernabeu.
“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 and try and win it,” he 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.”