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Toure has been a big success at Eastlands since his 2010 transfer from Barcelona and his decision to commit his future to Roberto Mancini's team until 2017 is a major boost for the club.
The 29-year-old was instrumental in City winning the English title last season and the Ivory Coast star admits that success has whetted his appetite for more silverware.
"This is where I want to be," Toure told City's official website.
"When I first arrived at City, every time I went to sleep I would dream about us winning something.
"Now it is about us being the best team in whatever competition we take part in."
Toure has also won the Champions League, two Liga titles, the FA Cup and Copa Del Rey during his career, but he regards City's title triumph -- their first in 44 years -- as the defining moment of his career.
"I want to continue winning titles and trophies and continue to make history," Toure said.
"I have enjoyed all of my time here and can't wait for the next chapter.
"This is an incredible club to be part of with fans that support a team to the end, whatever the circumstances.
"I will never forget how I have been treated here by the fans, the club and the owners and nothing would give me greater pleasure than to finish my career as a Manchester City player."
With City trailing 15 points behind Manchester United in the Premier League, Toure is unlikely to taste title success this season.
But he has set his sights on winning the FA Cup instead, with City facing Chelsea in the semi-final at Wembley on April 14.
"Of course now it looks likely that we will not successfully defend the Premier League title and that is sad for all of us," he said.
"But we can still finish second and win the FA Cup for a second time in three years and that is still an achievement for a club that won nothing for a long time.
"We must try to finish on a high note and then start preparing to win more next season. Football is always a challenge and always a puzzle to solve and that is why we all love the game.
"You have to use your skill, intelligence and strength to constantly improve and that is what we at City intend to do."