The 21-year-old has been on United's books since 2008 and along with his brother Fabio, has blossomed into a regular member of the first-team squad and his reward is a new deal that ties him to the club until the end of the 2015/16 season.
"I am so happy to sign a new contract," Rafael told United's official website. "I love playing for Manchester United, there is a great team spirit here and a real desire to win.
"My time here has been unbelievable; winning two league titles, a league cup and a Club World Cup has made me hungry for more trophies. I would like to thank Sir Alex for his belief in me and I would also like to thank the fans for their support."
Red Devils boss Sir Alex Ferguson feels Rafael has the potential to reach the top of the tree.
"Rafael is one of the club's brightest young prospects; he has no fear of playing and has great belief in himself," Ferguson said. "The boy has developed immensely since joining United, his energy and enthusiasm are a joy to watch.
"Rafael has all the attributes to become one of the best full-backs in the world and I am delighted he has signed a new contract."
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