The Estonian Football Association said that Ruutli would be at the helm until at least 31 December 2013, taking them through qualifying for the 2014 FIFA World Cup™.
It raised the possibility of him remaining in charge for longer, if they make it to the 2014 finals in Brazil.
Estonia take on Republic of Ireland next month in the EURO 2012 play-offs. Even if they lose the crunch two-leg contest, they will still have ventured further in international competition than any other team from the nation of 1.3million.
They are not letting success go to their heads, however. "I have to say that it will be harder for all of us to go on from this point than it was to reach the point that we are at now," Estonian FA head Aivar Pohlak said in a statement.
"It is very important that we got where we are now with an Estonian manager and that, for the first time, the Estonian national team will go through qualification for its third consecutive tournament under the leadership of the same manager."
Ruutli has managed Estonia since November 2007, guiding them through their unsuccessful campaigns for EURO 2008 and the 2010 FIFA World Cup and overcoming upsets on the way to EURO 2012.
"I am glad to have the task of leading the national team of our homeland," the 57-year-old said.