The 21-year-old England forward is now committed to the Old Trafford outfit until 2023 with the option of a further year.
The news, announced by the club on Monday, continues United’s positive summer after the recent signings of Daniel James and Aaron Wan-Bissaka.
Wythenshawe-born Rashford emerged as manager Old Gunnar Solskjaer’s first-choice striker in the closing weeks of last season.
His previous deal was due to expire next year and, with other clubs including Barcelona reportedly interested, United were keen to tie up a new deal for their academy graduate.
The new agreement reportedly puts Rashford, who has made 170 United appearances since breaking into the first team in 2016, among the top earners at the club.
Rashford told the club’s website: “Manchester United has been everything in my life since I arrived here at the age of seven.
“This club has shaped me, both as a player and as a person, so it is such a privilege every time I get the opportunity to wear the shirt.
“I want to thank Ole and his staff for everything they have done for me, they are the perfect group of coaches to learn from as I continue my development and look to push on to the next level.
“I will be giving everything I have to help get this club back to where it belongs and deliver the success that our fans deserve.”
Rashford is seen as a key figure as United rebuild for the future under Solskjaer after last season’s frustrating sixth-placed finish in the Premier League.
Solskjaer said: “Marcus is one of the most talented English players of his generation. He is an outstanding player; blessed with natural pace and energy.
“Marcus is a shining example of the talent that our academy produces and his upbringing means that he truly understands what it means to play for Manchester United.
“Despite being only 21-years-old, Marcus already has great experience. He has a fantastic future ahead of him with the club and I am delighted that he has signed a new contract.”
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