Cowher, 47, has coached the Steelers for 12 years -- the longest stretch with one team of any active coach in the NFL.
Pittsburgh has won seven division titles, advanced to four AFC Championship games and made one Super Bowl appearance under Cowher.
Cowher is one of only six coaches in league history to claim at least seven division titles.
His previous contract had run through 2005. The new agreement extends the contract through the 2007 season.
"We are excited about extending Bill's contract to continue the stability and success that he has brought to our team over the past 12 years," said Steelers President Art Rooney II. "He is a terrific person in addition to being an excellent football coach."
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