The multi-territory licence covers the use of music by the 100,000-plus musicians represented by PRS for Music in videos streamed on the platform. This includes official music videos, live footage, soundtracks and user generated content.
The licence also includes the rights to tracks available through PRS for Music's pan-European licensing initiative, the Independent Music Publishers' European Licensing (IMPEL).
Artists available through the IMPEL initiative include David Bowie, Justin Timberlake, Lou Reed and Goldie.
The new licence agreement is one of the most extensive yet, covering more than 130 territories across Europe, the Middle East, and Africa.
PRS for Music first licensed YouTube in 2007, one of the first copyright collection societies outside the US to do so.
This initial licence finished at the end of 2008, with a new deal not being signed until September 2009 due to lengthy renegotiations between the companies.
Disagreements during negotiations resulted in YouTube blocking UK viewers' access to thousands of music videos on the site between March and September 2009.
Robert Ashcroft, the chief executive of PRS for Music, said: "Streaming is a key growth area for PRS for Music, helping drive our online revenues to over £50 million in 2012. YouTube's vast reach around the world offers our publishers and songwriters a unique stage and music lovers' access to millions of songs.
"The issue of remuneration from streaming services remains a key one for our members, and the further evolution of our licensing relationship with YouTube will help ensure continued growth in royalties for our members from one of the world's leading video platforms."
In July, statistics published by PRS for Music and music and entertainment strategists FRUKT revealed that big brands invested a record £100 million on music in 2012.
Artist endorsements, such as Mastercard and Emile Sande at the Brit Awards, brought in £4.5 million, a 33 per cent increase in brand spend from the previous year.
Digital spend reached £10.4 million thanks to campaigns including YouTube's LoveLive channel and the launch of the new Spotify app.
Live music sponsorship, meanwhile, accounted for the largest share of the market at 35 per cent, netting over £33 million.