Baldock, who came through the youth system at the Dons, put pen to paper on a two-and-a-half-year deal, with an option of a further year, prior to Saturday's home League One fixture against Port Vale at stadium:mk. His contract was set to expire at the end of the current season.
The 20-year-old has successfully made the step up to the first-team squad this season, with 19 appearances to his name ahead of Vale's visit to Milton Keynes.
Dons boss Karl Robinson told the club's official website: "George is a gifted young talent and he worked extremely hard in the closed-season to return in a fantastic shape. He has worked tremendously hard on and off the pitch to compete for a place in the first-team squad.
"Whenever he's played this season he's done remarkably well and I think now he's managed to step out from the shadow of his brother (Sam) and develop his own relationship with the supporters at stadium:mk.
"George is young, energetic and passionate and can play in a number of different positions. He's exactly the sort of player I want at this football club and I'm delighted to have secured his services for the foreseeable future."