"I wanted to announce that I have chosen to extend my contract at Paris Saint-Germain, and I am of course very happy. I am convinced that here I can continue to grow within a club that gives itself all the means to perform at the highest level," the 23-year-old said in a club statement.
"I am also very happy to be able to continue playing in France, the country where I was born, grew up and flourished."
Mbappe and club president Nasser Al Khelaifi posed holding a "Mbappe 2025" PSG shirt before the last game of the Ligue 1 season against Metz on Saturday. The crowd erupted when Al Khelaifi broke the news at the Parc des Princes.
The France forward, whose current contract expires on June 30, had been widely tipped to join Real Madrid.
The news went down badly in Spain.
LaLiga said it would file a complaint against PSG to European soccer's governing body UEFA as the deal "attacks the economic stability" of European football.
Amplifying a complaint by Spanish LaLiga chief Javier Tebas on Twitter a statement said:"It is scandalous that a club like PSG, which last season reported losses of more than €220 million ($A330 million) after accumulating losses of more than €700m ($A1.15bn) in prior seasons ... with a squad cost around €650 million ($A975 million) for this season, can close such an agreement," LaLiga said.
"LaLiga will file a complaint against PSG before UEFA, the French administrative and fiscal authorities and European Union authorities to continue to defend the economic ecosystem of European football and its sustainability."
Mbappe, one of the game's finest talents who burst onto the scene as a teenager and helped France win the World Cup in 2018, was set to leave on a free transfer when his contract expired at the end of the season.
Real's bid to sign Mbappe last year was rejected by the Parisian club, who appeared prepared to lose him on a free transfer this year.
Reports last year claimed the Spanish champions had offered PSG as much as €200 million ($A300 million) for the Frenchman.
PSG refused to sell, added Lionel Messi to their team, but still lost to Real Madrid in the Champions League.
Mbappe, however, excelled individually, scoring 36 goals and providing 26 assists for PSG in all competitions this season.
With Reuters
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