The striker has inked terms just hours after victory over Aston Villa on Saturday night.
Cunha's new agreement takes him with Wolves through to 2029.
Chairman Jeff Shi said: “Matheus has been on an amazing journey with us over the past two years and it’s been a privilege to see him grow into a big part of the Wolves family.
“Matheus has a good relationship with every at Compton Park, his personality is infectious to those around him, and we hope this new contract will provide a boost to the group.
“We can all see his quality on the pitch, but off it he’s developed into a leader of the group, and we’re delighted that he’s signed a new contract. It’s always important to us that we reward our strongest and most impactful players, and Matheus deserves this new deal.”
Sporting director Matt Hobbs said: “The new contract is a reward for what Matheus has done, and symbolises his importance to us on the pitch. It is something that he's earned because of everything he’s given us and will continue to give us.
“Matheus loves the club, loves the fans and really appreciates the opportunity the club has given him. The fans have taken him under their wing, and he’s loved being here, so it's been a really positive experience for both sides.
“His talent is undeniable and he’s a real winner. He wants us to achieve our goals now, and when a player of his quality shows he's with you and up for the fight, it’s a big lift for everyone. Now he has to do what he’s been doing, and even more. I expect him to knuckle down through the second half of season, because we need everyone at it.”