The 27-year-old moved to the Vicente Calderon from home-town club Osasuna in 2007 and has helped Atletico win the Europa League, Copa del Rey and two UEFA Super Cups during his time in the capital.
This season, Garcia, who is one of the three club captains at Atletico, is the club's second top-scorer behind Diego Costa with 14 goals in all competitions and has been a key part of the side that is enjoying a superb campaign.
Diego Simeone's team are currently level with Barcelona and Real Madrid on 60 points at the top of the Primera Division standings and through to the last 16 of the Champions League, where they face AC Milan in their first leg on Wednesday.
Atletico also reached the semi-finals of the Copa del Rey, where they recently saw the defence of their title ended by Real.
Garcia said on his club's website: "I'm very happy with the agreement. Both the club and I wanted to finalise it because I'm very happy here.
"Now the only thing left is to continue working to achieve the team's objectives. Things are going very well and we are working hard to continue along this line for a long time to come."