The 51-year-old's previous contract was set to expire in 2012 and he has been recently linked with a move to the Bayern Munich hotseat in the summer.
However, Loew will now remain with the former European and world champions until the 2014 World Cup finals in Brazil.
"The harmonious contract talks have once again made it clear how great our mutual trust is," DFB president Dr. Theo Zwanger said. "The respectful, open dealings we had with one another is the best prerequisite for continuing our successful work together in the future.
"I wish much success to our national team coach Joachim Loew, the entire sporting management and the team manager Oliver Bierhoff in the ongoing qualification, the upcoming European Championship in Poland and Ukraine, and the World Cup in Brazil."
In an earlier interview with Bild, Loew stressed the importance of his early contract extension:
"It could indeed have bypassed all those involved, and it was a constant presence during the tournament. We want to avoid the same situation at Euro 2012."
Loew also stated his belief that the future is bright for German football.
He continued: "The cooperation with the DFB (German Football Federation) has been good over the years and even if there was one problem, it were resolved."
"We see good prospects for the national team with our young players and the DFB is in agreement with our concept. Therefore, we can assume that we can go beyond Euro 2012 and continue to progress. The Euros are also a stepping stone to the World Cup in 2014."
Loew has been the head coach of the die Mannschaft since July 2006 and led them to the final of Euro 2008 and the semi-finals of the World Cup last summer.
