The 53-year-old, whose current agreement runs until the 2014 World Cup, took over after the 2006 World Cup and, since then, has led Germany to the final at Euro 2008 and the semi-finals at the 2010 World Cup and Euro 2012.
"Since the World Cup in 2006, the team have always been among the top four at the World Cup and European championship," said DFB president Wolfgang Niersbach in a statement.
"We have great trust in Joachim Loew and... we would like to show this with the contract extension."
Analysis from Andreas Schulz, Eurosport Germany:
"This is a logical move after an easy qualification campaign. Some would have preferred to wait what happens in Brazil, but the DFB wanted the issue to be solved early. In 2010 the contract issue was open during the tournament: That’s something everybody wants to avoid now.
"Basically it doesn’t matter that much: if Germany win the World Cup, he’ll continue, if the result is unsatisfactory he will resign or be forced to do so, no matter how long the contract runs for. The big question is: how do you define unsatisfactory? The DFB and popular opinion might disagree on this one.
"Giving Loew a new contract isn't exactly a popular move. People are longing for a title, and they tend to underestimate strong results from previous tournaments and the easy qualification campaign – no one thinks for a second how France or England would love to have our results. So most supporters tend to see the glass half empty. If Germany win the World Cup, it’s logical given the quality of the players. If we are stopped in the semis, it’s a failure and Loew is responsible and has to resign."