The striker, who has scored 47 goals in 126 appearances since joining in the summer of 2008 for an undiclosed fee from Spanish side Merida, put pen to paper on his new contract after Saturday's game against QPR at Elland Road.
Luciano was delighted to pledge his future to the club.
"I'm very happy to sign the contract and stay at the club," he said.
"I love the fans, we are doing well, and we want to get to the Premier League. I want to be a part of that, and I'm really pleased."
United manager Simon Grayson was delighted to secure the services of a striker whose contract was due to expire at the end of the season and who was attracting interest from a host of clubs.
"It's fantastic news that has signed his contract," said the boss.
"He has shown his importance to the club with his both his goalscoring ability and he has never been the sort of player to shy away from giving 100 per cent.
"It was vital that we secure his services after losing Jermaine Beckford last season, and I believe this shows the ambition we have as a football club.
"It is a major boost for everyone, particularly as there was considerable interest in him."