The Brazil forward joined the Ligue 1 champion from Barcelona on a five-year deal at a world-record €222 million ($344 million) in August 2017.
Neymar had been linked with a return to Barca, but the 29-year-old has now firmly committed to PSG, which announced his new deal on Sunday (AEST) afternoon.
L'Equipe reported that the former Santos star's new terms will see him earn €30 million ($46.5 million) per season in the French capital.
"I'm very happy to be extending my contract with Paris until 2025," Neymar said.
"The truth is that I am very happy to be staying here for four more years, to be a part of the club's project to try and win titles, to try and achieve our biggest dream, which is the [UEFA] Champions League."
"The first factor is happiness, the joy of being a part of this squad," the Brazilian added, hinting that he had endured some difficult times at the club in the past which led to speculation about his future there.
"I have changed a lot, I have learned a lot," he added.
"Things have happened that should not have happened. We had fights, a few sad times, but overall the evolution has been very positive. I am happy, I am proud to be a part of the history of Paris Saint-Germain.
"I think I improved as a person, as a human being, as a player too. So I am very happy to be extending my contract to be part of the history of Paris Saint-Germain, and I hope to put many more trophies on the shelf."
PSG is locked in a tight battle to defend its Ligue 1 title with Lille, which extended its lead at the top of the table with a 3-0 victory over Lens in the Derby du Nord on Saturday (AEST).
Neymar and his team-mates will look to cut that lead back to one point at Rennes on Monday (AEST), victory being vital with just two matches left in the championship race thereafter.