The 70-year-old Selig had indicated that he was set to retire when his contract expired on December 31, 2006, but changed his mind after coaxing by the owners.
Selig took over as acting commissioner in September 1992 after Fay Vincent resigned. He agreed to a five-year contract in July 1998 and then received a new five-year deal in November, 2001.
Selig has yet to announce a decision regarding the Montreal Expos. Major League Baseball has been running the franchise since 2002 and has been trying to find it a permanent home.
The owners, who are wrapping up two days of meetings in Philadelphia, also approved starting a baseball World Cup as well as a baseball television network. The World Cup most likely would not begin until at least 2006.