Arsenal manager Arsene Wenger extended his contract at the English champions until May 2008.
Wenger, 55, arrived at Highbury in 1996 and has led the London side to three league titles in 1998, 2002 and 2004. His contract was due to run out at the end of this season.
"My intention has always been clear," the Frenchman told the club's website on Wednesday. "I love this club and I am very happy here."
Wenger's decision means he will be in charge when the club move into a new 60,000-seater stadium in 2006 and it will dampen regular speculation linking him with Real Madrid.
While Arsenal have dazzled in the English Premier League they have consistently underperformed in the Champions League, something Wenger clearly wants to rectify.
"Signing a new contract just rubber-stamps my desire to take this club forward and fulfil my ambitions," he said. "I still have so much to achieve and my target is to drive this club on."
The announcement comes three days after Arsenal's record 49-match unbeaten league run was ended by Manchester United's controversial 2-0 victory at Old Trafford.
Wenger's post-match remarks about referee Mike Riley, who gave United a disputed second half penalty, are being reviewed by the Football Association.
Arsenal want to mirror Manchester United's policy of sticking by a manager to sustain long-term success. Alex Ferguson has been in charge at Old Trafford since 1986.
Arsenal captain Patrick Vieira, one of Wenger's first signings, nearly left for Real Madrid in the close season but Wenger's continued commitment to the club helped persuade the France midfielder to stay.
Wenger won the French championship with Monaco before moving to Japan's Grampus Eight in 1995. Arsenal have hinted they will offer him a place on the board when he retires as manager.
