The 20-year-old has broken through into Schalke's first team this season and his impressive performances have made him one of the hottest young talents in Die Bundesliga.
Several Bundesliga rivals, including Bayer Leverkusen, were rumoured to be monitoring Hanke's situation at the Arena AufSchalke and so the Royal Blues are relieved at his decision.
"Mike is a very talented player. If he continues to work hard on his game, he has every chance of playing a very important role in Schalke's future over the coming years," said Schalke coach Jupp Heynckes.
Hanke expressed his delight at his new deal whilst admitting that it has been a difficult time for him after receiving other offers.
"My heart was always with Schalke," he said.
