Valencia reached an agreement with coach Nuno Espirito Santo to extend his contract to June 30, 2018, the club announced on Monday.
The former Porto goalkeeper took over as Juan Antonio Pizzi's successor at the Mestalla in July of 2014, at which time he was given a one-year deal.
Valencia currently sit in fourth place in La Liga, and are in the last 16 of the Copa del Rey.
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- Valencia CF (@valenciacf) January 12, 2015
Nuno told reporters: "It's an honour and a pleasure. I will be eternally grateful to Valencia."
Nuno's greatest achievement in an 18-year playing career came in May 2004 as he helped Jose Mourinho's Porto win the Champions League trophy at the expense of Monaco.
He also played for Spanish clubs Deportivo La Coruna and Osasuna and has attracted fresh attention from Spain after guiding Rio Ave into both domestic Portuguese cup finals in 2013-14.
His side were, however, beaten by league champions Benfica in both games.