Parma head coach
He was rewarded by club president
Ghirardi told fcparma.com: "There have been rumours for a while and we began talking about it a month ago.
"The important thing is that I can say our coach has committed himself to a further two years after this season.
"I am very happy because it is the first time that I have extended a contract by such a long time.
"I suggested two more years and he accepted immediately, we agreed a deal within three minutes, and that says a lot about his desire to stay with us."
As a midfielder, Donadoni won three European Cups and five Serie A titles in a 10-year spell at the San Siro, but Ghirardi insisted there was no truth in the rumours.
"It goes without saying that we didn't rush the deal because of interest from some other club," Ghirardi insisted.
"I think this is a partnership that can go on for years and I hope he will achieve even more as a coach than he did as a player."
Donadoni added: "I was very happy and flattered when the president offered me the renewal.
"I don't hide the fact that I am an ambitious coach, but my ambition matches that of Parma."
Socceroos midfielder Carl Valeri will play Serie A football for the first time after Sassuolo claimed a maiden Serie B title with a 1-0 victory over third place Livorno.