The Ivory Coast international joined City from Barcelona in 2010 and was a key member of the team that won the Premier League title last season.
"I would love to end my career here," Toure told the club website on Thursday.
"Nobody knows what the next step is in football and I believe that if you stop dreaming, you should stop playing football, but this is where I want to be.
"There is no other place I would rather finish with and I want to continue winning titles and trophies with City. I believe we are just at the beginning of our journey," added the 29-year-old who also won the FA Cup in 2011.
Toure scored in last weekend's 3-2 derby defeat by Manchester United before being substituted late in the match with a knee injury but will be in the side to face Newcastle United on Saturday.
City are second in the table with 33 points, six behind United.
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