The club's Twitter account announced the extension on Friday:
Should the forward remain until the end of that contract, his City career will span a decade, having joined from Atletico Madrid in 2011.
Aguero, who is City's all-time top goalscorer with 204 goals from 299 appearances, is one of the greatest players in the team's history.
During his time at the club, Aguero has won the Premier League on three occasions and a trio of League Cups.
Per the club's official TV channel, the striker said he was pleased to extend his deal at the Etihad Stadium by another season.
"I am happy for this additional year," Aguero said. "My idea was being here for 10 years. I've been here for seven years, it's going to be 10 when the contract expires. Hopefully, that's going to happen. This was the main reason I signed."
Now 30 years old, Aguero is in the peak years of his career and remains a crucial member of the team under manager Pep Guardiola. Already in the 2018-19 campaign, he has grabbed five goals and two assists.
While some players take time to adapt to English football when arriving from overseas, the transition was seamless for Aguero, and the goals have flowed since:
The striker has had many memorable moments in sky blue, but his winning goal against Queens Park Rangers at the end of the 2011-12 campaign will ensure he forever remains in City and Premier League folklore.
Aguero's 94th-minute strike gave City a 3-2 win that day and in doing so clinched the Premier League title for the Etihad Stadium outfit at the expense of their local rivals Manchester United.
Sam Lee of Goal thinks an extension for Aguero shows how much loyalty he has to the football club:
Sam Lee @Sammy_Goal
The fact the announcement comes today, when it is absolutely leathering it down with rain in Manchester, highlights his loyalty to the club and to the city I suppose. He surely could’ve gone to another big club and enjoyed his calm, solitary life with a big garden & swimming pool
It'll be intriguing to see what comes next in the No. 10's City career. Under Guardiola, there have been times when Gabriel Jesus has been preferred at the point of the attack, with his extra dynamism and mobility giving the Premier League champions a different option.
But in terms of goalscoring, Aguero remains one of the best in the top flight, and City clearly feel he will have those razor-sharp instincts in the penalty area for many years yet.