The 44-year-old - whose deal will take him to the end of the UEFA European Championships in 2016 - has been at the helm since September 2010 and is preparing for his third major finals at the FIFA World Cup.
Portugal lost just once - to eventual Group F winners Russia - on their way to qualifying for the tournament in Brazil but had to go through via the play-offs, where Bento masterminded a 4-3 aggregate victory over Sweden.
He will now hope to do better than Portugal's quarter-final appearance at the 2010 World Cup.
The news was announced on the Portuguese football association's website on Wednesday with president Fernando Gomes declaring that he was "very pleased to be able to continue a project that has paid dividends".
Bento, who made 35 appearances for his country as a player, was delighted to have agreed a new deal.
"It is with honour and enormous pride (for me) to continue to serve my country," he said.
"I have never hidden that I feel very good in the national team, where I believe I can continue to be useful in developing a project that goes beyond achieving results in the national team but also has a strategic aspect."
Portugal were drawn alongside three-times World Cup winners Germany, the United States and Ghana in Group G for the finals in Brazil.
