Erik Hamren will lead Sweden's bid to qualify for the 2016 European Championships in France after agreeing to extend his tenure as head coach.
The 56-year-old's contract was due to expire at the end of the year and reports in Sweden suggested he would move on having failed to guide the Scandinavian nation to the 2014 World Cup finals.
Sweden were last month beaten to Brazil by Portugal over two dramatic legs of a qualifying play-off.
But on Thursday, Swedish Football Association chairman Karl-Erik Nilsson told svenskfotboll.se: "We are pleased with the job that Erik has done and are convinced he is the best man to lead us towards our next target."
Sweden finished second to Germany in Group C but Hamren won praise for masterminding a remarkable comeback against Joachim Low's side in Berlin.
The October meeting saw the visitors recover from four goals down to force a 4-4 draw but an earlier defeat to Austria - and a goalless draw with the Republic of Ireland - cost the Blagult dearly.
A 4-2 aggregate play-off defeat followed and Hamren is keen to put that behind him as he prepares for a fresh qualifying campaign.
"I am grateful that I got a few days to mourn and think of the play-off," he said.
"There were 12 heavy days. I had a strong belief that we would be able to make it to the World Cup and of course it's tough when you still do not succeed.
"I've had setbacks as coach before, but this looks to me like the biggest setback in my career."
He added: "My reason (for continuing) is that we have a really competent and skilled leadership team with a great attitude and energy, and I want to keep working with them."
Ljusdal-born Hamren replaced Lars Lagerback in 2009 after the long-serving Sweden coach failed to book a place at the 2010 World Cup. The nation would then reach Euro 2012, only to exit after the group stage.
At club level, Hamren enjoyed successful spells with Rosenborg, Aalborg and Orgryte, and won back-to-back Swedish Cups with AIK in the 1990s.
Rikard Norling, who last week announced his resignation from Allsvenskan champions Malmo, had been suggested as potential successor to Hamren but on Tuesday signed a three-year deal with Norwegian club Brann.