In a statement issued ahead of Sunday's Abu Dhabi Grand Prix, Mercedes added that seven-times champion Michael Schumacher, the most successful driver in the sport, would again be Rosberg's team mate next year.
The team said Rosberg, who joined from Williams in 2010, had agreed "a multi-year contract extension to include the 2013 season and beyond."
Rosberg, the 26-year-old son of Finland's former champion Keke, has yet to win a race since his debut in 2006 but is highly regarded.
He has had three podium finishes and scored 217 points since he joined Mercedes.
This season he has scored five more points than Schumacher and is seventh overall with two races remaining. "To win in a Silver Arrow (Mercedes) will be one of the highlights of my life so far," he said.
"I have every confidence that the team will provide me with a winning car and that we will be able to contribute to the fantastic racing heritage of the Silver Arrows."
Team boss Ross Brawn hailed the German as a driver who can win races and championships and said he had already achieved "results at the very limit of the technical capabilities of our current car."
"He has an excellent work ethic and, together with Michael, this gives us a driver pairing who consistently push the team to improve and progress," he added.
"We look forward to providing Nico with a car which will enable him to compete right at the front of the field and achieve his deserved first win in Formula One."
Before his long-term commitment to Mercedes, Rosberg had been one of the candidates tipped by the media as a possible replacement for Brazilian Felipe Massa at Ferrari after next season.
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