The 20-year-old has been linked with a number of top-flight sides since making his big breakthrough this term, most recently being tipped to join Liverpool or Everton.
Brooks, recently called up to the Wales national side for crucial qualifiers against Moldova and Republic of Ireland, is now under contract at Bramall Lane until the summer of 2021.
United manager Chris Wilder told the club's official website: "I'm delighted that David has yet again extended his contract - he's been rewarded for an excellent start to the season.
"David sees his future at Sheffield United and that's what we want to hear because, without doubt, he is one of the hottest properties outside the top-flight."
Brooks has played a big part in the Blades' impressive start to the campaign on their return to the Championship, producing a man-of-the-match display in the recent Steel City derby against Sheffield Wednesday and also impressing against Wolverhampton Wanderers - two of 12 appearances to his name in 2017-18.