The Portuguese has put pen to paper on a contract which runs until the summer of 2023, replacing his previous one which was due to expire next summer.
His backroom staff are expected to follow suit, and delighted chairman Jeff Shi said: "Nuno really is the special one to Wolves. He’s also my teacher in football.
“He’s brought us a clear identity, and all the work we have done to build our first team over the last three years started from the identity created in Nuno’s head.
“He is a guy born for football, living for football. To him Wolves is not only a job, but also a unique team to work with to fulfil his football ideal.
“It’s my pleasure and honour to have worked with him for three seasons, in which we have experienced many unforgettable moments together and made some achievements together.
“Now, we are standing at the door to a new cycle. The story of Wolves’ football evolution under Nuno’s leadership is continuing with even more passion and determination than before.
“The board and I are all very happy to see Nuno’s commitment to the club, now let’s open the next chapter for our pack.”
Nuno, so far, has spent three years at Wolves, leading them to the Championship title before back-to-back seventh-placed finishes in the Premier League.
He has also guided them to the FA Cup semi-finals and Europa League quarter-finals over the past couple of years.
On getting the deal done on the eve of the new top-flight season – Wolves heading to Sheffield United – Nuno said: "I feel good. Ready for it. Looking forward to it.
"Working really hard for it, because it’s a new cycle, no matter what you did before, it’s about what’s in front of us and this is what we think we should do.
"Let’s prepare well, let’s challenge, do the way we do things, fight for it.”
He added: "It’s all about the fans, since day one. It’s all about them. We miss them, during the pandemic it’s been very hard for us as a squad, the players, the bond we created in such a long season that we had.
"The number of games we shared together and we really miss them. I think the best way to be fair to them is say we will be here, so when they return, we can stay and enjoy again together, this is the best thing.
"It’s easy to decide because we, as coaching staff, want to enjoy, we want to make things happen, just helping the players to become better so the fans can really be proud as Wolves fans and enjoy the players and create bonds again. We miss the fans but we will be together again.”