The extension runs through the 2012 season.
Wannstedt, a former National Football League coach and a player at Pitt in the early 1970s, already had a contract through 2009 when he got the extension despite having a losing record.
"When Dave Wannstedt became our head football coach less than three years ago, it was our shared goal to build a football program grounded in appropriate values and structured for sustainable, long-term success," Chancellor Mark Nordenberg said.
"Though everyone who cares about Pitt football wishes that this season had produced more victories on the field, clear signs of progress can be seen in this young, talented and clearly committed team."
Pitt was 16-19 overall and 5-7 this season under Wannstedt after his team beat WVU 13-9 in a major upset.
Wannstedt was an offensive tackle for Pitt from 1970 to 1973. He coached the Chicago Bears and Miami Dolphins in the NFL.