The 20-year-old has impressed since moving into F1 for the 2016 season, and became the youngest grand prix winner with his victory in Spain last year.
The son of former racer Jos Verstappen has been linked to both Mercedes and Ferrari in media speculation but Red Bull were determined to lock in a youngster widely seen as a future world champion.
Red Bull team principal Christian Horner emphasised his importance to the future of the team in a statement at the U.S. Grand Prix.
“We are delighted that Max has agreed to extend his contract with Red Bull Racing” said Horner.
“We had a phenomenal start together in Spain last year and Max has only pushed on from there. It was a great moment for the whole team to see him put the frustrations of this season behind him in taking that fantastic victory in Malaysia last month.”
“He is pure racer, with an undeniable talent at the wheel and a rare instinct for what it takes to compete consistently at this level,” added Horner.
“As we now look to the long term with Max, he is in the best place in the sport to build a team around him to deliver our shared ambition.”
Verstappen, who made his Formula One debut with Red Bull-owned Toro Rosso at the age of 17 in 2015, said the Austrian energy drink company had always shown their faith in him.
“Red Bull has always shown their faith and belief in me with actions,” Verstappen said.
“They invited me in to the young driver programme as a 16-year-old, then giving me my start in Formula One when I was just 17, and then the opportunity to race with Red Bull Racing where I had such a dream start with this team.
“They have always backed me and my ambition and I know we share that ambition.
“Their support, from the guys and girls in the factory through to the crew in the garage, no matter what plays out on the race track, has always been 100 per cent.
“We’ve also had some fun times. I’m very happy to commit further to Red Bull Racing and I’m looking forward to working together to enjoy more success in the years to come.”