On the eve of City's Champions League match against Spanish counterparts Real Madrid on Tuesday, the Spain international has signed a new deal which keeps him at the club until summer 2017.
Silva, whose previous deal ran until 2014, is the third of City's core players to sign new contracts following club captain Vincent Kompany and goalkeeper Joe Hart signing on for the long term.
"I'm very pleased because I’ve been here for two years now and I feel very happy here at the club, in the city and with all the people," Silva told the club's official website. "So now I'm delighted to be extending my contract and being here really does feel just like home for me.
"We've won the Premier League title and two other trophies too, and the team is growing and we are now aiming at the Champions League and so that also is another reason to want to stay here and try and win it."
Silva, 26, joined City from Valencia for £26 million in June 2010 just before he won that summer's World Cup with Spain. He has gone on to score 14 goals in 107 games for City, and last term registered 15 assists in the Premier League, more than anyone else.
That season ended with City ending their 44-year wait for the championship, and Silva went on to win a second European championship a few weeks later in Poland and Ukraine.