"I am delighted that we were able to agree early on continuing our work until the 2014 World Cup," Low said in a statement.
"Together with German Football Federation (DFB) chief Theo Zwanziger and general secretary Wolfgang Niersbach we believe that it makes sense to continue our successful path with the team in the same style."
Apart from Low, the federation also extended the contracts of assistant coach Hansi Flick, team manager Oliver Bierhoff and goalkeeping coach Andreas Kopke.
Low has an positive record with Germany having won 43 of 63 games and drawing 11. Germany have lost nine games under Low in four and half years.
He extended his contract to 2012 only days after leading Germany to a third-place finish at last year's World Cup in South Africa but contract speculation in the German camp at times overshadowed some impressive performances on the pitch.
"We believe in the quality of our players and see good prospects for the team," said Low. "That is why I accepted the offer from the DFB bosses for an early extension."
YOUNG SQUAD
Low, 51, took Germany's youngest World Cup team in 76 years to South Africa with injured captain Michael Ballack missing.
They flourished despite Ballack's absence, scoring four goals apiece in wins over old rivals England and Argentina on their way to the semi-finals where they were beaten 1-0 by eventual champions Spain.
Low was far from a household name when he became assistant to national team coach Jurgen Klinsmann for two years. He took over as senior coach when Klinsmann decided not to renew his contract after the 2006 World Cup.
Low, who had previously coached VfB Stuttgart and had stints in Turkey and Austria, led Germany to the final of Euro 2008, which they also lost to Spain.
Germany are on track to qualify for Euro 2012, topping their qualifying Group A with 12 points from four games.
"I wish our national team coach Joachim Low... a lot of success with this young and promising team in the qualifiers, the Euro in Ukraine and Poland as well as the World Cup in Brazil," said DFB president Zwanziger.
