"Real Madrid FC and Fede Valverde have reached an agreement regarding the extension of the player's contract in a deal that ties him to the club for the next six seasons, until 30 June 2027," it said.
Valverde, who joined Real Madrid's youth team in 2016-2017 from Penarol, is currently in his fourth season with the first team which, during his tenure, has won a Club World Cup, a La Liga title and a Spanish Super Cup.
During the 2017-2018 season, Valverde went on loan to La Liga's Deportivo de La Coruna.
Now 23, he played for Uruguay in the latest Copa America.
His long-term renewal confirms Valverde as a key midfielder for Real Madrid given fellow midfielders Luka Modric and Toni Kroos are now in their thirties.