The Ivory Coast international's new deal is worth almost £45 million across four years, and is equivalent to around £220,000-per-week.
Toure joined the Citizens in 2010 and was instrumental in their Premier League winning campaign last season, as well as their FA Cup victory in 2011.
There had been some uncertainty surrounding Toure's future at Manchester City after his agent claimed two weeks ago that if a deal was not on the table by last month, then the former Barcelona midfielder would be off.
However that threat failed to materialise and the Sun now report that Toure has signed a new £11 million-per-year deal.
The 29-year-old was reportedly frustrated with the hold-up in negotiations which began in July last year - having been told the deal would be finalised by last September.
However talks between both parties are said to have resumed after Toure returned from international duty,and an agreement was quickly reached.