The Dutchman, who became part of Red Bull's junior programme in 2014 and was handed an F1 drive with its junior team Toro Rosso the year after, was promoted to the energy drink giant's main F1 outfit during the 2016 season.
He has won eight grands prix since and bagged a best finish of third place in the drivers' championship standings, achieved this past year following Red Bull's switch to Honda engines.
"I am really happy to have extended my partnership with the team," Verstappen said. "Red Bull believed in me and gave me the opportunity to start in Formula 1 which I have always been very grateful for.
"Over the years I have grown closer and closer with the team and besides the passion from everyone and the on-track performance it is also really enjoyable to work with such a great group of people.
"Honda coming onboard and the progress we have made over the last 12 months gives me even more motivation and the belief that we can win together. I respect the way Red Bull and Honda work together and from all sides, everyone is doing what they can to succeed.
"I want to win with Red Bull and our goal is of course to fight for a world championship together."
Verstappen is yet to mount a sustained title challenge with Red Bull, and has previously indicated that he wanted to see the team start 2020 strongly in order for him to commit his future to it longer-term.
However, shortly following Charles Leclerc's multi-year extension at Ferrari, Verstappen has likewise officially taken himself off the market for F1's switch to new regulations in 2021.
"It is fantastic news for the team to have extended our agreement with Max up-to and including the 2023 season," Red Bull team principal Christian Horner said,
"With the challenge of the 2021 regulation changes on the horizon continuity in as many areas as possible is key. Max has proven what an asset he is to the team, he truly believes in the partnership we have forged with our engine supplier Honda, and we are delighted to have extended our relationship with him."
Verstappen will be partnered by Alexander Albon in the team's 2020 driver line-up.