The 29-year-old goalkeeper has played 87 games in the Premier League and has been capped nine times by England.
Butland said: “This is an amazing club and one that I am now proud to represent. I’m really looking forward to working with an unbelievable goalkeeping group, supporting each other every day to create the best training and playing environment for the team.
“I’ve played against David de Gea and represented England alongside Tom Heaton; they are top-class ‘keepers, and I am relishing the opportunity to compete alongside and support them as team-mates.
“There is a lot that this group can achieve this season and I’m excited to play my part in helping everyone to reach these ambitions.