The former Galatasaray coach will remain in charge of his country until 2020, having begun his third spell in charge in August.
The legendary coach began his third spell in control of the national team, initially on a temporary basis, earlier this year after Abdullah Avci stood down following a dreadful run of form.
The Turkish Football Federation quickly announced its intention to keep him in the job for the long haul after he left the Turk Telekom Arena and he will lead the team in their bid to qualify for Euro 2016.
"We've agreed to a seven-year deal with our coach," TFF president Yildirim Demiroren said. "We want to be a permanent fixture at every tournament. To do this we thought we better get Fatih Terim. It was easy to convince him."
Terim has overseen two of Turkey's most successful periods, securing its qualification for the European Championship for the first time in 1996 before leading them to the semi-finals of the tournament in 2008.