The former Valencia and Spartak Moscow boss had been heavily linked with Milan after winning the UEFA Europa League and securing a fifth-place finish in his first full season at Sevilla.
But with the Spaniard's previous deal scheduled to run out at the end of June, he and the Liga club have agreed a renewal that will keep him under contract until 2016.
"Unai Emery, coach of Sevilla FC, has signed a renewal with Sevilla for two more seasons, so will be on the bench during 2014-2015 and the following year," read a statement on the club's official website.
Despite the reported interest from Milan, both Emery and the club's board had spoken in recent days of their confidence that an agreement would be reached.
Emery was appointed at Sevilla in January 2013.
Having won the competition in Turin with victory over Benfica earlier this month, Emery said recently he was "satisfied with the team's progression".
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