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"Real Madrid and Jose Mourinho have reached an agreement to extend the latter's contract with the club until 30 June, 2016," the club said in a statement published online.
The 49-year-old self-appointed "Special One" took Real Madrid to their 32nd league title last month, ending a run of three successive league crowns for bitter rivals Barcelona.
That made him only the fourth coach to have won four different league titles after taking the English, Italian and Portuguese crowns, along with Austria's Ernst Happel, the late Croat Tomislav Ivic and Italian veteran Giovanni Trapattoni.
Mourinho, who joined Real in May 2010 on a four-year deal, said early in May he had no ambition to coach in new countries. Media reports had speculated on his returning to England.
