Mourinho intends to win more titles for Real after this season's success.
He said: "My objective is to try to win more league titles with Real Madrid. I'm delighted to stay on. I needed to coach this team in order for my career to be complete, but winning with Real Madrid is more important than coaching or winning with the team.
"My objective was to win La Liga and now I want to try to win more championships with this side. I have two years left on my contract and my family and I are happy with a stability we never had before due to moving every two or three years. We're delighted to remain here.
"President Florentino Perez managed to achieve the difficult task of getting me excited about his project. He told me Real Madrid needed me and that I needed Real Madrid to round up my career after winning the Champions League with Inter Milan. I am grateful to the President for convincing me to take that step and for his support. Coaching Real Madrid has been, and will continue to be, the toughest job in my career."