The Finn was in contention for the seat alongside Mercedes junior Esteban Ocon. The 2020 campaign will mark Bottas' fourth at the Silver Arrows.
Bottas joined Mercedes in 2017 following the sudden retirement of Nico Rosberg. In his time with the team, he has picked up five Grand Prix wins, two of which have come in the opening half of the 2019 season.
"I am very happy and proud to be part of the team for a fourth season and wish to thank every team member and the board of Mercedes for their trust and belief in me," Botts said.
"My performances have been getting better and better each year, and this is a great way to kick start the second half of 2019.
"My overall target is to become Formula One world champion. I believe that on paper, and from my experience with the team, Mercedes is the best option for me to achieve that goal in 2020.
"We have nine races to go this season and I am determined to keep improving at every one of them. Now, all my thoughts are on Spa and delivering a strong performance with the team this weekend."
Mercedes team principal Toto Wolff says that Bottas has risen to the challenge that the Silver Arrows asked of him for the 2019 season.
"For 2019, we set Valtteri the challenge of coming back even stronger than we saw him in the first part of 2018 - and he has achieved that, with some really impressive performances in the early races this year," Wolff stated.
"Although it has been his most successful first half of a championship so far, he is hungry for more and determined to keep on improving and raising his level. That's the mindset we want from all our team members.
"The results we have achieved together with Valtteri are no coincidence: he has been an integral part of our championship success in the past two seasons, his teamwork with Lewis has been exemplary and he has shown real strength of character in how he has responded to setbacks.
"I'm delighted that he will stay with the team for another season at least - and look forward to seeing him raise the bar even further."
Bahrain International Circuit - Winter testing