Should the 47-year-old see out the length of his new deal he would become the longest-serving national coach in the country's history.
Gatland guided Wales to the Grand Slam in 2008 but he has struggled to the height the same heights since.
But after signing his new deal the former Wasps coach insists all the structures are in place to take Wales back to the top.
"I have chosen to stay in Wales because of my confidence in the players we have, the coaching structures we have developed and the succession plan of talent we now constantly update," said Gatland.
"I know the other major rugby nations take us seriously as opponents who can play excellent rugby and that inspires me to help take this group of players even further.
"There is an incredible amount of hard work ahead but the national squad now has the means to deliver what the Welsh public wants.
"I made no secret of the family reasons which have made me consider returning to the southern hemisphere but it is a measure of how devoted I am to Wales that I want to stay."