The announcement came ahead of Sunday's Japanese Grand Prix at Suzuka, with Button the only driver still standing between Red Bull's Sebastian Vettel and a second successive championship.Vettel needs just one point to clinch the title while Button must win to have even a glimmer of a hope of staying in contention with four more races to come after Japan.
McLaren said in a statement that retaining Button's services for the next few years would strengthen the Woking-based team's long-term stability.
Lewis Hamilton, the 2008 world champion, already has a contract with the team to the end of next season.
"I've never felt more at home at a team than I do at... McLaren," said Button, who won his title with Brawn GP -- the former Honda team now racing as Mercedes.
"I've won four of the greatest races of my life here (with McLaren), I'm currently lying second in the drivers' world championship and I feel that I'm driving better than ever," the 31-year-old Englishman added.
"You can only achieve that with the right level of support, and I truly believe that the passion and determination to win are stronger here... than anywhere else," said Button, who started his F1 career at Williams in 2000.
McLaren gave no details about the deal, other than saying it was multi-year, but the length of time will end paddock speculation about a possible move by the Briton to glamour team Ferrari for 2013.
"I've made no secret of my ambition to continue winning races and world championships and I fully believe this is the place where I can achieve those things," said Button.
"We... know how to win and we're busy refining an organisation that will enable us to keep on doing that for years to come."
Hamilton, who risks finishing second behind a team mate in the championship for the first time, welcomed the 'great news'.
"Jenson has been a great person to work with and a genuine team player, from the moment we welcomed him on board (in 2010)," he said.
"Jenson and I are as hungry and as ambitious as ever to win races and world championships in the future."
McLaren team boss Martin Whitmarsh hailed Button as "one of the most capable and respected drivers we've ever had."
"He's a considerable credit to this organisation and I'm proud to be his team principal," he added.
"I feel sure that he'll now build on the considerable success he's already achieved with us and will be even more successful with us in years to come."
Vettel leads the championship on 309 points with Button a distant second in the standings on 185. Hamilton lies fifth on 168 points.
Source: Reuters Sports
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