The 18-year-old is currently in his second campaign at the Allianz Arena having made the switch from Rennes for €28.5m.
However, despite his undoubted potential, the teenager has been restricted to just two starts in the Bundesliga, that being accompanied by 40 substitute appearances.
As a result, there has been much talk about his future, the suggestion being that clubs in the Premier League have been preparing to make approaches for his signature in the summer.
Arsenal and Manchester United have each been credited with an interest in the youngster, the likelihood being that he would become a regular in their respective first teams.
Instead, Bayern have moved to end all speculation regarding Tel's future by handing him a fresh contract until 2029, an extension of two years.
Speaking to the club's official website, Tel said: "This contract extension means a lot to me. I've already learnt a lot at Bayern, both on and off the pitch.
"Munich has become a home for me and my family, and the fans are also very important to me. I can't be the player I am without them.
"When you play for Bayern, you always want to win every trophy. I want to score and set up goals, play with heart and energy for Bayern, and give everything for this club and its fans."
Sporting director Christoph Freund added: "Every club wants players like Mathys Tel, young, extremely talented, hungry and willing to learn. The way he already plays at this level at the age of 18 is something special.
"We want the right mix in our squad, and Mathys plays an important role here. He knows what makes FC Bayern tick, he feels comfortable and at home here. Now we're taking the next steps together and are looking forward to the coming years with him."
Although Tel has been limited to four starts and 26 substitute appearances during 2023-24, he has still contributed seven goals and four assists.
As well as handing Tel the full 90 minutes against Freiburg last Friday, head coach Thomas Tuchel introduced Tel for the final 12 minutes against Lazio on Tuesday as Bayern progressed through to the Champions League quarter-finals.