Jackson had said last month he had come to terms with the Lakers, but final details had to be worked out before the deal was signed.
"I enjoy working with the players and staff of this team, as well as management and ownership," Jackson said. "I'm looking forward to continuing my work with the Lakers and to continue to live in the great city of Los Angeles."
"Nobody has been more successful from the sideline in the history of this game than Phil and his record obviously speaks for itself," said Lakers General Manager Mitch Kupchak. "We're excited to have a coach of his experience, stature, and ability leading this team for the foreseeable future."
The Los Angeles Times reported last month that Jackson would be paid $11 to $12 million next season. He is in the final year of a three-year, $30 million deal.