The 26-year-old Matuidi joined PSG in 2011 on a three-year deal from St Etienne and could have left as a free agent at the end of the season. French media reports had linked him with a move to English Premier League club Manchester City.
"I absolutely wanted to continue at PSG. The club's limitless ambition has no equivalent in Europe," Matuidi, a regular for France, told the PSG website.
Matuidi, who has 19 caps, has featured in 141 games in all competitions for PSG, playing a key role in the club's rise to the top of French football.
He is the second midfielder in a week to extend his contract at the Qatari-owned club after Italy's Thiago Motta, who has signed up until 2016.