Formula One Management’s Bernie Ecclestone and Automobile Club de MonacoÃ¢â‚¬â„¢s Michel Boeri agreed the deal in London on Wednesday just days before the Hungarian Grand Prix in Budapest.
Monaco is one of the pillars of the sport and for many is the highlight of the calendar as the rich and famous swoop on the principality for the weekend.
Ecclestone had previously suggested that F1 could pull out of Monaco but unlike threats to drop other Grands Prix, including a British race, it was never likely to result in the sport actually saying goodbye to what is arguably its flagship race.
No other circuit on the F1 calendar can rival Monaco for its appeal, glamour and unique characteristics.
While other tracks may be Monacoesque in design, the atmosphere in Monte Carlo is one that cannot be replicated around ValenciaÃ¢â‚¬â„¢s harbour or SingaporeÃ¢â‚¬â„¢s Yas Marina.
MonacoÃ¢â‚¬â„¢s new deal will see the race on the F1 calendar through to 2022.
The only other races confirmed beyond 2016 are the British Grand Prix at Silverstone, and a US Grand Prix at the new Austin circuit, due to hold its inaugural race in 2012.
MORE: The latest football news
MORE: The latest tennis news