The coach says he has been offered a two-year extension of his current deal, which expires in the summer.
The coach has been in charge of the Azzurri since 2010, guiding his charges to the Euro 2012 final two years ago before easing them into the World Cup finals in Brazil.
Last year it seemed that Italy would need a new coach after the World Cup with Prandelli allegedly wanting to return to club soccer. But recent reports suggested he had a change of heart, and the coach confirmed Monday that he intends to stick with the national setup until at least the end of Euro 2016.
"At this moment I feel a great satisfaction," Prandelli told ANSA, which reports that the former Fiorentina boss will officially sign the deal in the coming weeks. "I'm proud of the fact that the Italian football association have proposed a two-year renewal to me, regardless of the outcome of the World Cup. For this reason I have given my full availability."
This summer Prandelli will be hoping to replicate Italy's efforts from eight years ago, when it was the surprise winner of the 2006 tournament in Germany under Marcello Lippi's guidance.