The new deal will keep the Brazilian youngster at the club until 2014.
“Playing for Manchester United is every young player’s dream,” Fabio told the club’s official website.
“I’m very happy and proud to commit my future to the club.
“In the time I’ve been here, I’ve learned a lot from the world-class players that I train with and I hope that as time goes on, I can contribute more and more to the success of this great club.”
United boss Sir Alex Ferguson added: “Fabio has settled into the club really well.
“He’s a natural footballer; a player who has good pace, reads the game well for a boy of his age and is always looking to attack.
“He’s had some bad luck with injuries, but he’ll make a fine Manchester United player in the years to come.”
