The deal will take Giggs, 39, into his 23rd season as a first-team player at Old Trafford. Sir Alex Ferguson said that Giggs will be offered a coaching role after his playing career ends and that no other footballer will emulate his success.
Giggs made his United debut in March 1991 and is on course to make his 100th senior appearance against Norwich City on Saturday. The veteran midfielder said he is 'delighted' to have extended his stay at the club.
"I am delighted to have signed a new contract. I would like to thank Sir Alex and the coaching staff and I would also like to thank David Gill who has been a tremendous support over my many years here," Giggs told the club's official website.
"This is an exciting team to be part of, with great team spirit, and we are again pushing for trophies as we head towards the business end of the season."
"I am feeling good, enjoying my football more than ever and, most importantly, I feel I am making a contribution to the team," he said.
Giggs has struck in all 23 seasons in the top flight for United. The Welshman has won 12 Premier League titles, four FA Cups, three League Cups, two UEFA Champions Leagues, one Super Cup, an Intercontinental Cup and a Club World Club.
Ferguson hailed Giggs' recent form in the league and said the midfielder deserves the contract extension.
"He is a marvellous player and an exceptional human being. Ryan is an example to us all, the way in which he has, and continues to, look after himself," Ferguson said.
"He could be playing his 1,000th game tomorrow and I don't think that will ever be achieved again, the way players contracts seem to work these days."
"He deserves this contract as his form has never changed. He still has great balance and touch on the ball and great fitness," he said.
United host Norwich City on Saturday before playing Real Madrid in the last-16 second-leg match at Old Trafford on Tuesday.