Brooks, 20, has established himself as an important part of Chris Wilder's set-up this season and has started three league matches so far this season, including the 4-2 victory over city rivals Sheffield Wednesday last month.
The young Welshman's talents inevitably attracted interest from Premier League sides; Merseyside rivals Liverpool and Everton are both known admirers of the midfielder, who recently earned a call-up to the Wales senior squad for their recent World Cup qualifiers.
Everton, known for their impressive youth set-up and academy sides, have carved out a reputation for cherry-picking the cream of the young Championship crop in recent years and have shopped at Bramall Lane before - Dominic Calvert-Lewin swapped South Yorkshire for Merseyside for around £1.5m last summer.
Everton signed a number of precocious young talents during the summer transfer window, while Liverpool were reportedly planning to lodge a £10m January bid for Brooks, who had apparently also caught the eye of Arsenal.
Liverpool's chances of capturing Brooks in the winter transfer window were recently rubbished by Wilder, and the Blades boss was delighted to see his prized asset commit his future to Bramall Lane as he bids to drag his side to the top-flight of English football.
"I'm delighted that David has yet again extended his contract – he's been rewarded for an excellent start to the season," Wilder told Sheffield United's official website.
"David sees his future at Sheffield United and that's what we want to hear because, without doubt, he is one of the hottest properties outside the top-flight."
With the furore surrounding his future diffused for the time being, Brooks can now focus on helping Sheffield United achieve back-to-back promotions. Wilder's side currently find themselves third in the Championship table after 12 matches and could climb to the summit with a victory over struggling Reading, who earned a much-needed 1-0 win against Leeds United last weekend.