The French defender confirmed last week that he had agreed terms with Valencia and he has now put pen-to-paper on a deal to stay at the Mestalla until 2017.
Barcelona had been tipped to make a move for Mathieu after Eric Abidal was allowed to leave the Nou Camp, while Real were also reported to be weighing up an approach.
However, after signing his new deal and seeing his buy-out clause increased to €20million (£17m), the 29-year-old expressed his delight.
"I am very happy," Mathieu is quoted by Superdeporte. "Everything has been done and I have renewed my contract with Valencia."
Last week, Mathieu had acknowledged he was waiting to see if there was interest, but felt that staying at Valencia would boost his World Cup prospects with France.
He told L'Equipe: "I was waiting to see other propositions, but I have always known I would stay. The World Cup is in one year's time and the French team is on my mind.
"I could not see myself starting again from scratch while I feel fine at Valencia where I am considered as an important player."
The defender also confirmed that Barcelona were keen on his signature, but he admitted that he probably would not have been first choice for the Spanish champions.
"Interest from Barcelona? Yes indeed, but I was only fourth or fifth position on their list. I just know their top priority was Thiago Silva," he said.
"I could have waited but I had to be respectful towards Valencia who were waiting for my answer for a while.
"After having talks with the coach, I think I will start the new season in the centre of defence."