The Spanish midfielder is heading into his 10th season with the Premier League giants, where he has won four league titles, two FA Cups and four League Cups.
"This is the last one," he told the Daily Mail. "Ten years for me is enough. It's the perfect time.
"Initially the club were talking about two years, but I decided to sign another one so I finished at 10 years.
"It completes the cycle. It's a nice round figure. I can never see myself playing against City for another team. So 10 years — that's it!"
Explaining the decision, Silva said: "I've got a family now and it's about priorities," he added. "I want to spend more time with the family. I've got another year at Manchester City so we will see what happens after that."