The 61-year-old guided Portugal to their first European title with an extra-time victory over hosts France in Paris earlier this month.
He has coached Portugal since 2014, having previously spent four years in charge of the Greece national team.
Portugal begin their 2018 World Cup qualifying campaign on 6 September against Switzerland in Basel.
Subscribe to the BBC Sport newsletter to get our pick of news, features and video sent to your inbox.
Portugal's Euro 2016-winning coach Fernando Santos has signed a new four-year contract.