The team has announced the contract extension on the eve of the German's home grand prix at Hockenheim this weekend.
Rosberg joined the squad in 2010 after four seasons at Williams, winning six-times to date with the factory outfit.
“I am very proud to drive the Formula One Silver Arrow of the modern era,” said the 29-year-old.
“As a German, the heritage of Mercedes-Benz is very special for me, and I am proud to be able to represent the best car brand around the world.
“It has been a difficult road to get to where we are now – but everybody kept believing and, thanks to the fantastic support from Mercedes-Benz, we are now leading the way in F1.
“There has been big progress during the past year, building up our structure, management and capability for the future.
“We have an awesome team and I am confident that we have the right people in place at every level.
“I'm looking forward to the next years together, when we will keep pushing to win even more races – and, hopefully, championships.”
Head of Mercedes-Benz Motorsport, Toto Wolff said re-signing Rosberg gives the team stability.
“His speed, commitment and focus have all helped to give clear direction and to drive the team forward.
“With his performances in 2014, Nico has demonstrated to the outside world what we knew already in the team: that he is one of the very top drivers in Formula One.
“This new contract brings us important stability and continuity for the future and I am delighted to be able to make the announcement in time for the home race of Mercedes-Benz and Nico in Hockenheim.”
Rosberg earlier this week revealed a special helmet for this weekend, celebrating Germany's victory in the FIFA World Cup.