"AC Milan is pleased to announce that Rafael Alexandre da Conceiçao Leao has renewed his contract with the club until 30 June 2028," Milan said in a statement.
Milan did not communicate the details of the deal but Italian media reported that Leao will earn a basic net salary of five million euros with a series of bonuses in place which could make his actual earnings significantly higher.
Milan have also reportedly inserted a release clause of €175 million which can only be exercised during a summer transfer window.
The 23-year-old has made 162 appearances for Milan since signing from Lille in 2019, netting 41 times and setting up 29 more.
He was crucial to Milan winning their first Serie A title in 11 years last season and getting to the Champions League semifinals this campaign.