The Italian took charge at the Bernabeu last summer, signing a three-year deal in the process.
The former Paris Saint-Germain boss led the Spanish side to the Champions League and Copa del Rey last term and he has now said that he wants to remain at the club for the long haul.
"I've spent a year-and-a-half here and it's going very well. I feel fine with everything and I would like to renew, but there has to be agreement on both sides," he told Radio Cope.
Madrid return to La Liga action against Levante this weekend.