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The new agreement will take the 24-year-old close to his 30th birthday and earn him just over £40m a year, putting him on par with Mercedes' Lewis Hamilton.
Verstappen claimed his first world championship title in 2021 after edging out seven-time champion Hamilton in a controversial finish at the season-ending Abu Dhabi Grand Prix in December.
- Nikita Mazepin barred from British Grand Prix
- Lewis Hamilton hits the front, teams hit trouble as first F1 Test ends
- Who's fastest? Who has most laps? The key tables at F1 Testing
The Dutchman, whose current deal with Red Bull expires in 2023, will begin his title defence on March 20 when the 2022 season gets under way in Bahrain.
Verstappen's new contract will prevent Mercedes from targeting him as a replacement for Lewis Hamilton should the Briton retire at the end of his current deal in 2023.
Don't miss Duel on Sky Sports!
The story of Verstappen and Hamilton's fascinating title tussle last season will be charted in an original two-part Sky Sports documentary airing on Sky Sports Main Event and Sky Sports F1 from 7pm on Sunday, March 6.
Duel: Hamilton vs Verstappen - which is also available On Demand from March 6 and then on Sky Showcase and Sky Documentaries from Monday, March 7 - will include exclusive interviews with Verstappen, Red Bull Team Principal Christian Horner and Mercedes chief Toto Wolff.
We will also hear from a host of former world champions, plus pundits and journalists as they reflect on one of the greatest Formula 1 seasons of all time and a quite epic title battle.
What we learned from the first F1 test
Mercedes and Red Bull do not look to have dropped the ball in F1's new regulations, but there are promising signs for new battles with Ferrari and McLaren in the hunt.
Sky Sports F1 writer Matt Morlidge reflects on the first pre-season F1 test in Barcelona
Verstappen's rise to F1 world champion
Matt Morlidge and James Galloway chart Verstappen's evolution, from teenage protege to Formula 1's 34th world champion.
Watch Duel: Hamilton vs Verstappen on Sky Sports Main Event and Sky Sports F1 from 7pm on Sunday.