To celebrate the deal, the left-back released a song entitled 'Munich my Throne'.
After months of speculation and almost absolute certainty that he would be moving to Madrid, Davies has finally renewed his contract with Bayern Munich for another five years.
"I'm very happy to have renewed my contract with this great club. I arrived at Bayern when I was 18 and I just wanted to learn as much as possible every day to become one of the best in my position. Now I'm looking forward to another five years together. I've already achieved a lot here, but there's still more to come," he told the club's media.
For Christoph Freund, sporting director, it's about securing the talent of "one of the best players in the world in his position": "The fact that he's still here shows us Bayern's status in international football and that Alphonso has found his sporting home in Munich."
Now 24, Alphonso Davies joined the Bavarians as a teenager, aged just 18. Since then, he has made 220 appearances for the club, scoring 12 goals and providing 34 assists.
He has won the Bundesliga five times, the Champions League once, the European Super Cup, the Club World Cup, two German Cups and three Super Cups.