The former Germany international, who has a FIFA World Cup winners' medal from his playing days, led the USA to Brazil 2014 with ease as they topped the final CONCACAF stage by four points from Costa Rica.
Klinsmann has taken the USA from 36th in the world - their lowest-ever FIFA ranking - to a current standing of 14th.
As well as extending his contract, the 49-year-old has also taken up an additional role as US Soccer's technical director, in which he will oversee youth operations in the American game.
"I am very fortunate to continue the work we started more than two and half years ago," he said on the official website of the US Soccer Federation.
"It's exciting to see the progress we have made, and we continue to make improvements on all fronts.
"The role of technical director is a huge challenge and also a huge opportunity as we look to keep connecting the dots to the youth national teams, coaching education, the development academy and the grassroots efforts in this country.
"These are fascinating topics and I am excited work with so many talented people and hear fresh ideas.
"For sure it means more work, but also many more fulfilling opportunities."
USA have been drawn in Group G in Brazil, alongside Klinsmann's native Germany, Portugal and Ghana.
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