Germany coach since 2006, Löw had a contract until just after the Euro 2012 tournament, to be held in the Ukraine and Poland, but after reports he wanted to stay on until 2014, the DFB moved quickly to sign up the 51-year-old.
It means Löw's training team, assistant coach Hansi Flick, goalkeeping coach Andreas Köpke and team manager Oliver Bierhoff will take Germany to the Brazil tournament.
With Bayern Munich set to part ways with coach Louis van Gaal at the end of the season, Löw has removed himself as a potential replacement and said he is focused on Germany with his team top of their Euro 2012 qualifying group.
"I am pleased that we were able to agree quickly to a continuation of our co-operation up to the 2014 World Cup," said Löw at the DFB headquarters in Frankfurt. "We believe in the quality of our players and see good prospects for our team. So we were pleased to accept the offer from the DFB's senior management to sign an extension early."
Löw admitted he was surprised at the speed of negotiations.
"It demonstrates the relationship of trust that the negotiations will be closed in the next few days," he said.
Löw said he had wanted to make sure the contract extension was formalised long before the end of Euro 2012 - which culminates in the final in Kiev on July 1, 2012 - and avoid the previous negotiation problems.
Löw and the DFB failed to agree terms at the beginning of last year, when his contract was last under renewal, and a deal was only done after the World Cup last July, as Germany came third.
"Joachim Löw and his team have left their mark on the team in recent years," said DFB president Theo Zwanziger. "The smooth contract talks have once again shown clearly how great the mutual trust is."
Löw has said he would not consider carrying out his national team coach role alongside the soon-to-be vacant Bayern job.
"No, that is out of the question for me," he said. "It is possible, as Guus Hiddink showed by coaching both Chelsea and Russia's national team for some time. But in our country, it doesn't work.”
"That would conflict with the interests of the league," he added.