Bayern head coach Louis van Gaal and Bundesliga giants Bayern Munich agreed on a contract extension until 2012, the club announced on Monday.
"After a victory anybody could extend a contract. Therefore we extended the contract with Louis van Gaal after the loss against Mainz to show the public his importance to our club," Bayern chairman Karl Heinz Rummenigge said.
Bayern Munich struggled at the Bundesliga with only eight points on ninth position which is far behind the Bavarian standard.
"We have testing times but the board shows confidence in my work," van Gaal said after the signing.
Bayern Munich will clash on Basel at Champions League group stage on Tuesday.
At the previous season Bayern won the double, Bundesliga and German Cup, only Inter Milan could stop the Bavarians from winning the third title at the Champions League final.