The 23-year-old nicknamed "Chicharito" made a big impact with United in his first season, scoring 20 goals from 45 appearances in all competitions after arriving in July 2010 from his hometown club Chivas de Guadalajara.
He has now scored 23 in 55 appearances and signed until the end of the 2015/16 season.
United manager Sir Alex Ferguson said: "The last player I remember making an impact as big and as quickly as Javier is Ole Gunnar Solskjaer and he reminds me of Ole a lot.
"His talent for creating space in the box and his finishing ability mark him out as a natural goal-scorer. Off the pitch, he is a pleasure to manage. He works very hard and is a popular member of the squad."
Hernandez added: "Playing for Manchester United has been a dream come true for me. I never expected my first year to go so well and I'm delighted to commit my future to United."
His agent Eduardo Hernandez said the contract had been renegotiated two weeks ago, explaining: "Javier was not badly paid with his initial contract, but it was his first contract and, with respect, not comparable with the likes of Wayne Rooney and Nani."
His excellent form pushed Dimitar Berbatov out of a regular starting place and the Bulgarian striker's future at Old Trafford is still to be decided.
