The president of the DFB (German football association), Reinhard Grindel, announced the two-year contract extension in a press conference on Monday.
"I have always stressed that I couldn't think of a better coach than Jogi Löw for our national team," Grindel told reporters at the DFB's headquarters in Frankfurt.
"Today is a good day for the team, the coaching staff and the DFB in general," he added.
The 56-year-old Löw, who took over for Jürgen Klinsmann as thnational team head coach after the 2006 World Cup, said he didn't have to ponder the decision to sign on for another two years for very long.
"I feel the DFB's absolute confidence. When the head and the heart both say 'yes,' then there isn't much to think about," he said at the press conference.
Another crack at the Euros
The extension will keep Löw at the helm through the next European championship, a title that has so far eluded him. At Euro 2016 in France last summer, Germany stumbled at the second-to-last hurdle, losing 2-0 to the host nation in their semifinal in Marseille.
Löw described winning a European title as a "special challenge," which remains a particular goal of his. The closest he has come to winning the Euros was the 2008 tournament in Austria and Switzerland, where Germany lost 1-0 to Spain in the final.
The national team is currently involved in qualifying for the 2018 World Cup in Russia, and defending the title they won in Brazil two years ago is the next major goal.
"We all want to confirm the success of Brazil at the World Cup in Russia," Löw said. For us, the only thing that matters to us is to qualify top of the group for the World Cup in Russia."
Germany lead European qualifying Group C with perfect record, following wins over Norway, the Czech Republic and Northern Ireland. Their next qualifying match is against San Marino on November 11.
In the decade since he succeeded Klinsmann as Germany head coach, Löw has coached the national team in 141 matches, in which he has posted a record of 94 wins, 24 ties and 23 defeats.