If to believe the London newspaper Evening Standard, the 22-year-old star is set to earn a reported ?238,000 per week.
"I am delighted, everyone knew that I wanted to stay. I am very happy at the club and I want to win trophies, and hopefully we will do that this season," Ronaldo said.
He joined Manchester United in August 2003 from Sporting Lisbon for ?12m and has progressed until he became the world?s most exciting talent at the moment.
There were a lot of speculations about his future at the club after clashing with teammate Wayne Rooney in the World Cup quarterfinal match between Portugal and England.
Rooney was sent off for stamping on the groin of Portugal defender Ricardo Carvalho. Ronaldo had earlier ran to the referee to protest Rooney's actions, receiving a shove from the England striker.
The 22-year-old, who was seen winking at his bench afterward, went on to score the winning penalty kick.
After feeling a lot of tension back in England he announced that he wanted to quit Old Trafford but he was persuaded to stay and showed a glamorous performance with the Red Devils.
"We had dinner with him in Portugal and stressed this had happened before to David Beckham," United manager Alex Ferguson said.
"There is nothing wrong with booing -- we get booed at most places. But he had the nerve to handle it. He still gets a bit of it, but that is only because he is a great player."
Ferguson also praised the talent of his wonder boy and set a challenge for him: "At 22, he has the same skill factor as Maradona and Pele. He is one of the best signings I have ever made. The measurement of his improvement this year is astronomical.
"In terms of top-flight football, where do you find a winger who has scored 20 goals. It is incredible.
Without question, Cristiano is getting to the level of best player in the world. Thereafter, it is up to others to decide whether he is as good as Maradona and Pele. "That is the challenge in front of him now."
By signing a new deal he closed the door to any further speculations about a possible transfer to Spain would it be for Real Madrid or Barcelona.