Selig, 73, has had the job since becoming acting commissioner in 1992. He became permanent commissioner in 1998.
Before the extension, granted at the team owners' meeting in Scottsdale, Ariz., Selig's contract was to expire next year.
"My optimism about the future of Major League Baseball has never been greater," Selig said. "Through the hard work of many, our great game has made many meaningful strides. We have achieved unprecedented labor peace, competitive balance, record attendance, business performance and exciting international growth."
Selig, former owner of the Milwaukee Brewers, has also been commissioner during some of the sport's most difficult periods, including a 1994 strike that canceled the World Series, and the steroids scandals of recent years.
"What will continue to be paramount to me is the protection of the integrity of the game," Selig said. "Major League Baseball unconditionally embraces its enormous social responsibilities. The sport faces important challenges, and we will not rest until they have been met."
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