Verstappen joined Red Bull in 2016 following a year at Toro Rosso, which marked his first season in F1.
The Dutchman became the youngest driver in F1 history to start a grand prix at 17 years, 166 days. Shortly after the start of the 2016 season, he was promoted to Red Bull where he won on his debut for the energy drink team.
Verstappen was one of many drivers that was out of contract at the end of the 2020 season, and by signing a new deal, has fit a large piece into the post-2020 F1 puzzle.
“I am really happy to have extended my partnership with the team," Verstappen said. "Red Bull believed in me and gave me the opportunity to start in Formula 1 which I have always been very grateful for.
"Over the years I have grown closer and closer with the team and besides the passion from everyone and the on-track performance it is also really enjoyable to work with such a great group of people."
In 2019, Verstappen enjoyed his most successful year in F1 to date, taking three race wins and nine podiums on his way to finishing third in the drivers' championship.
Last year was Red Bull's first with Honda, with Verstappen stating that the Japanese manufacturer has given him "more motivation" to stay at Red Bull.
"Honda coming onboard and the progress we have made over the last 12 months gives me even more motivation and the belief that we can win together.
"I respect the way Red Bull and Honda work together and from all sides everyone is doing what they can to succeed. I want to win with Red Bull and our goal is of course to fight for a World Championship together.”
Red Bull team principal Christian Horner added: “It is fantastic news for the Team to have extended our agreement with Max up-to and including the 2023 season.
"With the challenge of the 2021 regulation changes on the horizon continuity in as many areas as possible is key.
"Max has proven what an asset he is to the team, he truly believes in the partnership we have forged with our engine supplier Honda, and we are delighted to have extended our relationship with him.”
Verstappen will be joined at Red Bull next year by Alexander Albon, who is entering his second season of racing in F1.