The defender has previously been linked with Manchester United, Juventus and Atletico Madrid but will now be at Mestalla until 2023.
Gaya's new deal also includes an increase in his release clause, with the fresh terms requiring a bid of EUR100million to acquire the 22-year-old.
Having come through the ranks at Valencia, Gaya made 34 LaLiga appearances last season as Marcelino's men finished fourth, securing Champions League qualification.
"I really trust in this ambitious and exciting project," Gaya said.
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