The Spaniard, who took over from David Moyes at Goodison Park last summer, has been rewarded for an impressive first season in charge.
Under Martinez, Everton finished fifth in the Premier League with their record points tally in the competition.
Martinez, 40, began his managerial career at Swansea and came to Everton's attention during a successful four-year stint at Wigan, which was capped by last year's stunning FA Cup victory.
He initially moved to Everton on a four-year contract and immediately promised to bring Champions League football to the club, a target he narrowly missed out on in his first season.
His efforts, however, did secure European competition for the first time since 2010 via the Europa League.
"I loved my first season at the club," said Martinez. "I could not be more proud of the way Everton performed throughout the entire season and the memories we were able to make together.
"I am really excited about next season. I knew from the moment I arrived at Everton that this was a special place and I’d like to thank everyone associated with the club, the board, all the staff, the players and our brilliant supporters for believing in me and giving me the opportunity to build on the traditions and success of this great club."
Chairman Bill Kenwright added: "In many commentators’ eyes, Roberto Martinez is the best young manager in Europe. We agree. He took on an unfamiliar challenge for most managers; to take something really good and make it even better.
"He has succeeded. In his debut season he broke our Premier League record points haul, got us back into Europe and developed some of the most exciting young footballers in the game.
"He conducts himself off the pitch in the same way. He undertakes his business with great style, confidence, positivity and class. He is an Everton man."
- Sports & Recreation
- Premier League
- Champions League