Manchester United had wanted to sign the 29-year-old and offered Real around £30million for the Spain international.
But Real snubbed the offer and today confirmed their star man will remain at the club until 2020.
"I know this renewal has taken a while but my heart and head have always been with Real Madrid so I couldn't be happier," he said in a press conference.
"I've never spoken about my renewal. With a contract that had two years to go, whatever the press want to say I respect but the reality is a bit different.
GETTY
Sergio Ramos was paraded at the Bernabue today after signing a new Real Madrid contract
"My idea was to always be here and I always wanted to retire here if the president would allow it, and I'm thankful I have a new challenge to be the captain of this team. The priority is always Real Madrid, keeping our fans happy and winning titles.
"I'm being honest I never said I wanted to leave, I was quiet. I never said anything out of respect for my team-mates and the president, I never rang the office to ask for more money. I'm just very happy that I have renewed and I want to stay here for the rest of my career.
"At the end of the day I have been here almost my whole life. My first year was in Sevilla and the rest of my life has been here, that is sufficient motive to want to stay. There is nothing like this institution. My own happiness is the priority, in the end that was fundamental."
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It was understood that he as unhappy with life at the Bernabeu, although Real had him locked down to a contract until 2017.
Asked what encouraged him to renew, he said: "Honestly, if it was an economic decision I wouldn't have stayed," he said.
"It wasn't a question of money. There were personal and professional things that I needed to organise and that is all sorted.
"It is reality that I wasn't happy in certain ways. I never said I wanted to leave but I spoke to the people I needed to speak to and couldn't continue how I was. Those personal things were nothing to do with money.
"The economic situation, the president and I solved that in five minutes. There were other things to talk about - past, present and future. Now everything is cleared up I'm excited to get everyone together and try and win. Everything is cleared up now, I'm very happy to be here."