"I'll sign an agreement for two years with the Bangladesh Cricket Board later today," Whatmore told AFP by telephone on Wednesday.
The Australian's current two-year deal with the board was to expire on April 30.
Whatmore said he was keen to stay with the Bangladesh team though he has been linked with the Indian cricket team following the departure of New Zealander John Wright.
Under Whatmore, who guided Sri Lanka to World Cup triumph in 1996, Bangladesh won their first Test series by beating a young Zimbabwe side in January this year.
Whatmore is now with the team in Chittagong preparing for Bangladesh's maiden visit to England in May.
"Whatmore is a very good coach and under him Bangladesh team has already prospered," cricket board president Ali Asgar Lobby said confirming the new deal.
"He now knows the players, people and the local conditions here. Under him, I am confident the team will prosper further.Some years from now, Bangladesh should be able to make an impact," Whatmore said.
Bangladesh have won just one of 36 Tests and lost 31, with the remaining four drawn since gaining Test status in 2000.
In One-dayers, they have managed nine wins in 106 matches, including a victory over Pakistan in the 1999 World Cup. Bangladesh also beat India for the first time last November in Chittagong.