No financial details were immediately available for the deal, which follows manager Alex Ferguson's agreement on Wednesday to sign a new one-year rolling contract from June 2005.
Van Nistelrooy joined the English champions for 19 million pounds ($34.46 million) in 2001 and has scored 98 times in 127 appearances for the club since.
"It shows the ambition of the club to keep the best. Ruud has broken every record since he has been here," Ferguson said in a statement on United's website.
"His improvement and continual commitment to the club is an asset. Ruud has proved to be a fantastic signing and his contract extension is great news for the club and the fans."
Media reports say the 27-year-old's new deal will earn him up to 90,000 pounds a week, putting him on one of the league's highest salaries.
United have been looking to increase their firepower to keep pace with league leaders Arsenal, who have just splashed out up to 20 million pounds on Spanish international forward Jose Antonio Reyes.
United bought French striker Louis Saha from Fulham last week for 12.8 million pounds.
KNEE INJURY
Dutch international Van Nistelrooy eventually joined United from PSV Eindhoven for a then English transfer record in April 2001, after a first attempt to buy him a year earlier broke down when he failed a medical.
Days later, back in training at PSV, he collapsed after rupturing his cruciate ligament in his right knee and missed the European Championships, jointly hosted by his home nation, in June that year.
His disappointment was tempered when United came back for him and he said at the time the move was "a dream come true".
He said on Thursday: "I have had some great moments here but I want to continue to give the club my best, and I am looking forward to new challenges on the pitch."
Van Nistelrooy has won the English championship twice, in the 2000-2001 and 2002-2003 seasons, and was the premier league's top scorer last season with 25 goals. He has scored 14 league goals this season.
He was also top scorer in the Champions League in the 2001-2002 season with 10 goals and last season with 12 goals.
Van Nistelrooy joined PSV from Dutch first division rivals Heerenveen and netted 60 goals in two seasons at the Dutch champions.
United are second in the premier league, two points behind Arsenal.
