Nuno replaced Steve Cooper in December 2023 and kept Forest up, the club surviving on the final day of the 2023-24 season.
They suffered a four-point deduction for breaching profit and sustainability rules but finished 17th.
Forest were last season’s surprise package as they challenged for the Champions League spots and sat in the top four for the majority of the campaign.
They dropped out of contention after two wins in their final seven games but qualified for the Europa Conference League play-off stage.
Former Wolves and Tottenham head coach Nuno also took them to the FA Cup semi-finals for the first time since 1991, where they lost 2-0 to Manchester City.
Forest owner Evangelos Marinakis said: “Nuno has made a great impact and performed very well during his time with us so far.
“He has demonstrated that he maximises player performance and is an expert at developing players, whilst also embedding our young talent into the first team set-up.
“We enjoy a strong and solid relationship together and, above all, we share the same dream and ambition of writing a new history for Nottingham Forest, competing in the Premier League and in Europe and winning trophies for our great club.”
