Stefano Pioli believes Milan are building "something important" and is delighted to have extended his contract at the club.
The Rossoneri confirmed on Tuesday that Pioli has signed a new deal that will run until June 2022.
It had been expected that Ralf Rangnick would leave his role as head of sport and development at Red Bull to take over at San Siro as coach and sporting director, but those talks ultimately fell through.
Pioli had been given public backing by players including Zlatan Ibrahimovic after inspiring a reversal in Milan's results, particularly since Serie A resumed in June.
A 2-1 win at Sassuolo lifted Milan to fifth in the table and stretched their unbeaten run to 10 games in all competitions, with Atalanta the only team in Italy's top flight to have won more points since the turn of the year.
Speaking to Sky Sport Italia after the match, Pioli said: "I'm very happy. I've known for a couple of days. Starting next season at such a prestigious club, with a team with a lot of quality and room to grow, is very important.
"But our future is now. We have to think about the final three games. We can think about the future from August 3.
"The club have been fair with me. In the individual interviews, they told me nothing was definitive. I was just focused because I knew the job we were doing.
"If the league hadn't started again, we would have had many regrets. Since January 6, we've been third in the table, so there has been some growth.
"I was hoping to be able to continue a job that's just beginning. There will be challenges, important expectations, a lot of pressure, but also a great desire to show that what we're doing is a good basis on which to build something important.
"I was hoping for it, I really wanted it, and when I received the news, I was very happy."