The winger has penned a new deal to 2030.
"I am really proud to have signed this new contract. I have had some incredible moments with this club already but there is so much more to come," Diallo said.
"I have huge ambitions in the game and I want to achieve history at Manchester United.
"It has been a difficult season for everyone, but I fully believe that we are on the right path and the future is going to be really special. I am ready to give everything to help the team and make our supporters proud again."
United's technical director Jason Wilcox said: "Everyone is delighted with Amad's development.
"His quality on the ball, versatility and determination makes him a key part of the future of Manchester United.
"The best years of his career are ahead of him, and we all look forward to helping Amad to reach his immense potential and achieve success at the club in the coming seasons."