The 18-year-old centre-back was an influential player for the club's Under-23s last season on their way to lifting the Premier League 2 title, helping the champions keep eight clean sheets in 19 appearances.
Mbete is highly regarded by the Citizens and has already made three senior appearances under Pep Guardiola, including his debut in the 6-1 EFL Cup win over Wycombe Wanderers in September last year.
Speaking to mancity.com about his new deal, Mbete said: "This is a very proud moment both for me and my family. I want to express my thanks to everyone at the club for showing their faith in me.
"I have been fortunate to work under some amazing coaches throughout the academy and to be also able to train under Pep Guardiola and the first team coaches is an incredible privilege.
"I feel I am learning and improving all the time and there couldn't be a better club to keep developing.
"Having signed the new contract is a fantastic feeling and now I just want to carry on contributing in the best way I can."
Mbete becomes the latest Man City academy graduate to sign a new contract within the last 12 months, after Cole Palmer, James McAtee, Liam Delap and Finley Burns.
CSKA Moscow 
FC Rostov 
Leicester 
Chelsea 
Valencia 
Betis 
Dynamo Kyiv 
Chornomorets Odesa 
Verona 
Inter 
Bayer Leverkusen 
FC Heidenheim 
Borussia Dortmund 
SC Freiburg 
VFL Wolfsburg 
Union Berlin 
Arsenal 
Nottingham Forest 
Everton 
Brentford 
Spartak Moscow 
Lokomotiv Moscow 
Rangers 
Dundee Utd 
Atletico Madrid 
Alaves 
Lens 
Marseille 
Ingulets Petrove 
Shakhtar Donetsk 
AC Milan 
Juventus 
ST Malo 
Bordeaux 
Manchester City 
Tottenham 
Eintracht Frankfurt 
Werder Bremen 
Girona 
Espanyol 
Feyenoord 
Heerenveen 
ST Etienne 
Montpellier 
Grenoble Foot 38 
Heart Of Midlothian 
Celtic 
Reims 
Lyon 
PSV 
Groningen 
Celta Vigo 
Barcelona 
Benfica 
Estrela Da Amadora 
Sparta Rotterdam 
AZ Alkmaar 
Southampton 
Liverpool