The Portugal defender is delighted he will be working with the Special One next season.
"He's the right coach for Real Madrid. Thanks to his charisma and his experience we will return to being competitive in Europe," declared Pepe.
On his contract, Pepe added: "As regards to my new contract, I will have to earn it on the field. I have yet to give a lot for this shirt and everything will depend on my performance. I'm confident for the future."