Otamendi signed a five-year contract when he joined the English Premier League (EPL) club in 2015, reports Efe.
"I've enjoyed my time at City since the first day I arrived and I'm really happy to have extended my stay here by a couple more years," the player said in a statement provided by the club.
Otamendi, who has played 118 official games for Manchester City, has added an offensive dimension to his game this season.
"My only aim is to help the team and give all I can for this club. I am learning every day under (coach) Pep (Guardiola) and enjoying my football and I feel I can still improve as a player," he said.
Nicknamed "The General," Otamendi leads the EPL with 2,033 completed passes, nearly 400 more than the next defender on the list.
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