The Dodgers Wednesday signed Tracy to a two-year contract through 2006. His previous contract had expired recently.
"We are thrilled to have Jim continue as our manager," said Paul Podesta, executive vice president and general manager.
The club won the National League West title this year and has a record of 356-292 in four years under Tracy.
"I'm very excited to be back leading the Dodgers and to have the opportunity to finish what we started four years ago," Tracy said. "We set out to bring a world championship to Los Angeles and we will continue to work tirelessly until we reach that goal."