The 34-year-old goalkeeper has further committed his future to the Bavarian giants by signing for another three seasons, until 30 June, 2023, at the Allianz Arena.
"FC Bayern are very happy Manuel has extended his contract until 30 June 2023," explained CEO Karl-Heinz Rummenigge.
Manuel is the best goalkeeper in the world and our captain.
Sporting director Hasan Salihamidzic added: "The contract extension is an important sign for FC Bayern as well as for Manuel. Together we have created a win-win situation.
"That’s what was very important to Manuel and to us. Manuel stands for the continuous success of FC Bayern, for responsibility and world-class standards. I am delighted about our continued work together."
Neuer himself said: "I feel very comfortable and at home in Bavaria. FC Bayern are one of Europe's top football clubs."
Oliver Kahn, a Bayern executive board member and another legendary goalkeeper at the club, added: "I can easily put myself in the situation Manuel is in. We understand the direction Manuel wants to take in this phase of his career and what’s important to him. He’s sent a strong signal with this extension."
Neuer joined Bayern in the summer of 2011 and since then has won seven Bundesliga titles, five DFB Cups, the Champions League as part of the treble in 2013, and the Club World Cup.
The commanding goalkeeper also won the World Cup with Germany in 2014.
The decision still comes as a surprise due the imminent arrival of Alexander Nubel.
In echoes of Neuer the talented young keeper will join from Schalke on a free, something that Neuer has been vocal about.
With no rumoured loan for Nubel it remains to be seen how the situation will pan out next season.
The view from Germany
Eurosport Germany's Tom Muller: "The extension of the 34-year-old is an important signal to the Bundesliga, the supporters and other top European clubs - also financially. At a time when the whole football world is already looking at the Bundesliga, the Bayern team will gradually continue on the path they started months ago and extend with one service provider after the other. First coach Hansi Flick (until 2023), then Thomas Muller (2023) and Alphonso Davies (2025); and now Neuer, who is perhaps the most important building block.
"On the pitch the goalkeeper has left no doubt about his class this current season, keeping clean sheets in eight of 12 games in the current calendar year alone. As a captain, leader and integration figure, however, his value for the team goes far beyond that."