The veteran Welshman will now stay with the Premier League and European champions until June 2010.
Giggs, who made his Red Devils debut in March 1991, became the only player to score in every season of the Premier League with his winning goal against West Ham on Sunday.
Giggs told the club's official website that he is "delighted to be offered a new contract", adding: "I feel fit and I'm enjoying my football more than ever.
"This is an exciting young team and the spirit is great in the dressing room. I want to be a part of that and achieve even more success."
InspirationSir Alex Ferguson saluted the 35-year-old's approach to the game and believes he sets an example which all young players should follow.
The United boss said: "Ryan is a true professional of the game; his lifestyle, the way he looks after himself, his desire to always want to win is a credit to him and also an inspiration to any young kid who wants to become a footballer.
"He is like a young boy in the way that he plays and, although he wants to play every game, he understands that by using his experience when it matters is a benefit to him and the team.
"It would be easy for him to be complacent after all he has achieved but he isn't and that speaks volumes of why the club wanted to extend his services and use that experience."