Di Francesco took charge of the Giallorossi in June 2017 on a two-year deal and enjoyed an impressive first season in charge.
"I am extremely pleased to be able to continue to this adventure with Roma and our great fans," Di Francesco told Roma's official website.
"The confidence that the president and the directors have always shown in me makes me very proud, and I hope to repay them all next season with a campaign even more exciting than our last."
Sporting director Monchi added: "The renewal once again demonstrates the great confidence and belief we have always had in our coach.
"We are all convinced that together we can aim for new heights and achieve our objectives."
"Last summer, when we appointed Eusebio, I went on record as saying that we wanted someone who could come in and get the very best out of our first-team players and also help bring through some of our great young talent," president Jim Pallotta said.
"I think it's clear that he achieved both those objectives in his first season here as coach.
"It's important to have the continuity and stability that Eusebio brings to the project and the contract extension that he has signed is testament to our belief in his abilities to take Roma forward."