The 49-year-old Portuguese penned an initial four-year deal when he took over at Madrid in May 2010.
Mourinho led Madrid to the Copa del Rey crown in his first season in charge and in the campaign just completed he guided the club to their first La Liga title since 2008.
The 49-year-old, who joined Real in May 2010 on a four-year deal, said early in May he had no ambition to coach in new countries.
But media reports had continued to speculate on his returning to England, with some linking him to a move back to his former side Chelsea.
A statement on the Madrid website reads, "Real Madrid and Jose Mourinho have reached an agreement to extend the coach's contract with the club until June 30, 2016.
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Yesterday's news put an to end speculation about Mourinho's future, with reports still linking him with the vacant managerial position at former club Chelsea.
Madrid's title success last season, which ended Barcelona's three-year reign as Spanish champions, saw Mourinho become the first coach to be win the league in Spain, England (Chelsea) and Italy (Inter Milan). Mourinho is also one of only three coaches to have won the Champions League with separate teams having led Porto to the crown in 2004 and Inter in 2010.
He has also won numerous other trophies during a hugely successful coaching career that began with Benfica in 2000.
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Absolute fraud! only a greedy and gullible mind would jump at this..
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