Wolff, who was Bottas's manager during his stint with Williams, says the Finnish driver has exceeded initial targets and his "chemistry and dynamic" with team-mate Lewis Hamilton made it an easy selection for Mercedes.
"We gave Valtteri a big challenge this year, joining the team at the 11th hour, stepping up to the forefront of F1 and pairing with the sport's best driver as his teammate", Mercedes head of motorsport Toto Wolff said.
Bottas joined on a one-year-deal and his new contract still leaves everything open for 2019, when the driver market is likely to go through major upheaval with several top names in the spotlight.
Hamilton's contract is also up for renewal and expires at the end of 2018, although he has said he expects to agree a new deal. With that in mind, his results have been probably even more impressive.
The mutual respect between Hamilton and Bottas is a far cry from the tense relationship between Hamilton and Rosberg in the three previous years.
Wednesday's announcement means that both Hamilton and Bottas will race for Mercedes in 2018.
"For our team, the bonus factors are the respect and sportsmanship that have grown between our two drivers".
Mercedes lead rivals Ferrari in the constructors' championship by 62 points with only seven rounds remaining - and despite Singapore expected to suit the Italian team's vehicle - are odds-on to secure a fourth consecutive title. He also won the Austrian Grand Prix in June, but has been unable to keep pace with Hamilton in recent races. "Together, we continue to grow stronger day by day, and by keeping up our hard work I believe the sky is the limit". The welcome and the support from every team member and all the fans has been invaluable.
Prior to joining Mercedes, Bottas had never won a race and had achieved nine podium finishes, a figure he has already matched this season.
"However, there's always room for improvement and I still have not shown my full potential".