The Argentina international committed to the Premier League champions until the end of the 2018/19 season just a day after City captain Vincent Kompany also agreed terms on a new five-year deal.
Aguero was delighted to have his future secured before the start of the new season, and he is happy to put to rest widespread rumours of him returning to La Liga.
Aguero told the club's official website: “The reality seems to be that ever since I came here, during every close season, there have always been rumours suggesting that I might be returning to Spain.
“There has always been this speculation but I certainly never pay much attention to it.
“People hear this stuff flying around and they take it seriously but I can tell the fans and everyone at City to relax, I’m going to be here until I see out my contract.
“Each year, I aim to better the previous one. Last season was incredible but I’m not just satisfied with two Premier League titles, I want more and I can achieve them here alongside my teammates.
“This club is special; the fans, the stadium, the staff, the atmosphere, the new facility we’re moving into – everything!
“We have enjoyed lots of success and some incredible moments but the overall vision for the future and where we are going are the reasons why I wanted to stay here, to win trophies and to keep making history through my best years.”
Aguero joined City from Atletico Madrid in 2011, and he proved an instant hit with the City fans as he scored 30 goals in all competitions in his first season.
His most memorable strike was the dramatic winner in added time against QPR in the final game of the 2011/12 season which snatched the Premier League title away from city rivals Manchester United.
Aguero's scoring form dipped the following season, but he bounced back with 28 goals last term as City reclaimed their league crown from United.
He missed a chunk of the latter part of last season through injury, but he recovered in time to be named in Argentina's squad for the World Cup finals in Brazil.