Capello to stay with Russia
The former England coach, 67, took over from Dick Advocaat on a two-year contract in 2012 and steered his side to the 2014 World Cup as winners of Group I.
In a statement published on the official Russian Football Union (RFU) website, he said: "I am grateful to the president of the RFU and to the Russian minister of sport for their confidence in me.
"I am very pleased to continue working with Russia. We have big plans, and I will do everything I can to ensure the Russian fans are happy."
RFU president Nikolai Tolstoy said: "We are pleased that such a highly qualified coach will continue to work in Russian football.
"The document stipulates that Fabio Capello will oversee the institution of all national Russian football teams and he will be assisted by Russian specialists at the headquarters of the national team."
Russia host the 2018 World Cup and therefore do not have to qualify, meaning Capello and his coaching staff can begin their planning for the event once Euro 2016 is over.
Speculation had suggested that Capello could have made a return to club management once his two-year deal had expired, and had been linked with Tottenham after the departure of Andre Villas-Boas in December.