Vettel became the youngest driver to win a Grand Prix in 2008, and last year became the youngest ever world champion at the age of 24 years, four months and 11 days old.
Red Bull were keen to keep the German on board, and included an option on extending his deal when he signed a contract to the end of 2011 in August 2009.
A statement released Monday said: "Red Bull announces today that it has extended its agreement with Sebastian Vettel, meaning the current World Champion will remain with Red Bull Racing until the end of 2014.
"Having been supported by Red Bull since 1998, Sebastian is a graduate of the Red Bull Junior Team. In 2008 he became the youngest-ever driver to win a grand prix and last year became the youngest-ever FIA Formula One Drivers' World Champion."
The 2010 world title race was marked by Vettel's duel with Australian teammate Mark Webber, with the German ace overtaking the Australian to take the world title in the final race at Abu Dhabi.
The new season gets underway in the Australian Grand Prix on March 27, although in testing last month Vettel seemed cautious about the team's chances.
"It's still difficult to say. Sometimes depending on the configurations we're going 8 or 9 seconds slower," Vettel had said.
"For this reason it's difficult to read what the other teams are doing. But this year our car has behaved rather well in terms of reliability as much as speed.
"We know what we did in 2010 but that doesn't help us this year. We have a lot of things to resolve, new parts. That will keep us busy," said Vettel, adding: "We'll really see in Melbourne where we are."