The 59-year-old was appointed in August 2010 on a two-year contract with the provision of an extension.
Under his leadership Japan won a record fourth Asian Cup title last year and are through to the fourth qualifying round for Brazil.
Japan's football association had offered him a one-year rolling contract which would be terminated if Japan failed to make it to Brazil, the Kyodo news agency reported.
Japan top the five-team Asian Group B on seven points from three games.
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