The France international, who joined City from Arsenal in 2011, has committed his long-term future to the Etihad Stadium side with a deal that runs until 2019.
“I’m really happy to have signed this contract and to have committed my future with City,” he told the club's website.
“I’m 27 now and if you listen to some of the best managers in the game, they say that a midfield player’s best years are between 27 and 30 so I hope that I will give my best years to City.
“It took me time to adjust to living in Manchester because when you move here from London, it is a big change, but last year everything was perfect - I enjoyed my football and I love living in Manchester, feel very settled and I think that showed on the pitch.
“That’s why I’ve agreed this new contract – because I feel very much at home.
"Our supporters have been right behind me and it gives me the confidence to play my best game. Now I’m looking forward to the new season and to defending our title again.”
Nasri has played 129 games in his three seasons at the Ethiad Stadium, scoring 22 goals.