The Argentina defender has been in excellent form this season, missing just one of the Blues’ 23 Premier League games so far.
He has made 118 appearances since joining from Valencia with whom he spent just one season having previously been with Porto for four seasons.
Said Otamendi: “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.
“MY only aim is to help the team and give all I can for this Club. I am learning every day under Pep and enjoying my football and I feel I can still improve as a player.I’m a family man who enjoys being at home and I love living in Manchester, you sort of get hooked by it.It’s a very beautiful city and I’m very happy here.”