The 47-year-old arrived at Stamford Bridge in January, replacing club legend Frank Lampard as head coach on an initial 18-month deal "with the possibility of an extension".
That extension has been granted after the German, who was sacked by Paris-Saint Germain on Christmas Eve, delivered the Champions League trophy courtesy of a 1-0 win over city
Chelsea director said : Returning us to the top four in the Premier League was crucial, and we could not be happier with our success in the Champions League which crowned a remarkable season at Chelsea.
"We are obviously extremely pleased therefore to retain Thomas for a further two years, and look forward to more achievements in the coming seasons."
Tuchel has won 19 of his 30 games in charge so far, losing five times and conceding just 16 goals.
Last weekend, he became the first manager to reach back-to-back Champions League finals with two different clubs.