Ibrahim, 18, has broken into the first-team squad under Roberto Mancini this season, making his debut in the FA Cup match at Scunthorpe in January and more recently appearing in the Premier League against Burnley on Saturday.
"I am really happy; I am going to enjoy the moment. It is really exciting for me," said the Norwegian.
"The contract gives me time to learn my trade and push my claims. I couldn't be at better club."
Although City have millions of pounds at their disposal and have shown plenty of willingness to use them in the transfer market, Ibrahim believes youngsters will still be given their chance under Mancini.
"The boss has been great with me and the other lads," he said.
"He's a really good coach and he believes that if you are good enough, you are old enough and that sends a very positive message to all the young players at the club, particularly the next group of academy players coming through."
Ibrahim also wants to learn all he can from Patrick Vieira, a player who he tried to model his game on even before the Frenchman signed for City in January.
"Patrick is a great guy - he's done so much in his career and won so many things and to have him advising me out on the training pitch every day is fantastic," Ibrahim said.
"He has my game a lot already, giving me tips on where to play and how and when to move around the pitch - he's not a bad teacher to have, is he?
"Having said that, all the players want to help, too, including the more senior squad members. There is a great team spirit throughout the squad and I couldn't be at a better club."