The club announced Saturday the two sides had reached a multiyear extension, though it did not disclose terms of the pact. Bob Nightengale of USA Today reported it is a three-year deal worth $7.5 million.
MLB Network's Jon Heyman first reported the extension.
Martinez, who turns 56 on Saturday, signed a three-year, $2.8 million deal with a $1.2 million club option for a fourth season when the Nationals hired him as manager in October 2017.
General manager Mike Rizzo said earlier this month that signing Martinez was important.
"That's priority one, is to get Davey taken care of," Rizzo told reporters after signing his own three-year extension. "My plan is, and my preference is, to not pick up the option and to go beyond that. That's the plan going forward. See if we can get something done. Negotiate a longer-term deal with him that goes beyond just picking up the option."
Martinez took over for Dusty Baker, whose contract expired after the 2017 season. The Brooklyn, New York, native has a 198-183 record with the Nationals, including a 23-34 mark this year. He led the franchise to its first World Series title last year with a Game 7 victory over the Houston Astros.