There had been intense speculation over the Dutchman's future after a terrible 2023/24 Premier League campaign but United ended the season with shock 2-1 victory against Manchester City in the FA Cup final.
British media last month said Ten Hag, who has won two trophies in his two seasons at Old Trafford, would remain in his post following a performance review by club chiefs.
"Erik ten Hag has extended his contract as Manchester United men's first-team manager until June 2026," United said in a statement.
The former Ajax manager, whose deal had been due to expire in 2025, admitted there was work to be done to close the gap on United's Premier League rivals.
"Looking back at the past two years, we can reflect with pride on two trophies and many examples of progression from where we were when I joined," he said.
"However, we must also be clear that there is still lots of hard work ahead to reach the levels expected of Manchester United, which means challenging for English and European titles.
"In my discussions with the club, we have found complete unity in our vision for reaching those goals, and we are all strongly committed to making that journey together."
Dan Ashworth, Manchester United sporting director, said: "With two trophies in the past two seasons, Erik has reinforced his record as one of the most consistently successful coaches in European football.
"While the club's review of last season highlighted areas for improvement, it also reached a clear conclusion that Erik was the best partner for us to work with in driving up standards and outcomes.
"This group of players and staff have already shown they are capable of competing and winning at the top level -- now we need to do it more consistently."
Erik ten Hag signs new deal at Manchester United
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