The exciting full-back was heavily linked with Arsenal, Chelsea and Manchester United in recent weeks.
The 19-year-old's previous contract had a release clause that meant he could leave for just £18million.
However, Los Che have acted quickly to ensure that the player remains at the Mestalla for the foreseeable future.
It was claimed that Valencia would offer Gaya a ten-fold pay increase to commit his future to the club.
Reports in Spain claim that the deal has also seen Gaya's release clause double to £36m.