"I'm satisfied with this agreement which will allow us to continue working together," said Susic, who has coached the team since 2009.
"I know we have a good team. I know the players very well and I believe that this squad will have more chances with me then with someone else."
Susic said that Bosnia's 6-2 loss in the second leg of their Euro 2012 play-off against Portugal in November had only reinforced his determination.
Financial details of the contract were not revealed.
Bosnia has never participated in final phases of the European championships or the World Cup.
Susic, 56, spent a decade as a midfielder in France with Paris Saint-Germain - where he is considered one of their greatest ever players - and later coached a number of teams in Turkey from 1996 and 2008.