Xavi’s new deal will see him remain in charge until 2023. He took over the club immediately after retiring in May 2019 and has already won five trophies for the side.
The 41-year-old has been tipped to take over at Barcelona, where Ronald Koeman has failed to impress in his first season in charge but the Blaugrana will not be getting their preferred target anytime soon.
"We achieved a lot together, scored goals, won matches and titles, and we are all very proud of this success. Getting this kind of support is the best thing any coach can get," Xavi told Al-Sadd's official website.
“I have everything I could want to do well, and I feel proud to continue with Al-Sadd for an additional two seasons.”
Xavi also denied there is a clause in his contract that allows him to leave anytime Barcelona come calling.
“This is incorrect," he added. "I have a two-season contract with Al-Sadd, and I respect this contract - and I also respect the official negotiation methods between all parties."
Xavi won eight La Liga titles, four Champions League trophies, three Copa del Reys among other honours during his time as a player at Barcelona.
He also won two European Championships and the 2010 FIFA World Cup with Spain.