The Brazilian full-back has made 90 senior appearances since his arrival in July 2008, and started the 2009 Champions League final defeat to Barcelona in Rome.
Rafael won his first senior caps for the Brazil national side last month and the 21-year-old's agent, Cassiano Pereira, told Estadao ESPN: "Rafael is very happy to stay at Manchester United, who are one of the giants of world football and always play in Europe's biggest competitions."
Although there are plenty who feel Rafael is still too rash in the tackle, there is no doubting his attacking instincts and Sir Alex Ferguson evidently believes he has a big future.
Pereira added: "Manchester United are the club that opened the door to Europe for him. He is loved, respected and has prestige at the club.
"We are all very happy that he is renewing his contract."
Rafael is due to be separated from his twin brother Fabio next season though as he is being lined up for a loan move to QPR.