The young left-back was handed his debut by Louis van Gaal in a 2-0 win over West Brom back in November 2015 and went on to make a total of 14 first-team appearances in all competitions.
The news comes on the same day that striker Marcus Rashford committed his future to the club and Borthwick-Jackson insists he is looking forward to learning from Jose Mourinho and the rest of the United coaching team.
He told the club's official website: "I have grown up at United and have enjoyed every minute of being here. Last season was an incredible experience to make my first team debut and a dream come true for myself and my family.
"I feel it stands me in good stead for continuing my development as a Manchester United player. I will continue to work hard and take advice from the manager and his coaching team to improve with every training session."
Executive vice-chairman Ed Woodward added: "Cameron is one of a number of young players to come through our academy to make their first team debut last season.
"This is something that our club has always done and promoting the academy and U21 players is something that makes everybody associated with the club very proud. I'm delighted that Cameron has signed his new contract and look forward to seeing him in the squad for many years to come."