The 46-year-old Portuguese has been at the Molineux Stadium since the summer of 2017.
Esperito Santo, who was Jose Mourinho’s reserve goalkeeper when FC Porto won the UEFA Champions League in 2004, guided Wolves from the Championship to the Premier League in his first season at the club.
Wolves have secured back-to-back seventh place finishes in their two seasons in the Premier League under Esperito Santo and reached the quarterfinal stage of last season’s Europa League, where they lost to eventual champions Sevilla.
Wolves begin their campaign away at Sheffield United on Monday and Esperito Santo is relishing the prospect of improving upon their previous finishes this season.
He said: “I feel good. Ready for it. Looking forward to it. Working really hard for it, because it’s a new cycle, no matter what you did before, it’s about what’s in front of us and this is what we think we should do.
“Let’s prepare well, let’s challenge, do the way we do things, fight for it.”
"Nuno really is the special one to Wolves. He's brought us a clear identity," chairman Jeff Shi added.
"All the work we have done to build our first team over the past three years started from the identity created in Nuno's head."
