Cheeks, 51, was in the final season of a three-year deal. Terms of the new agreement weren't released. The Sixers are 96-122, including 23-31 this season, under Cheeks.
Even though the team is under .500 this year, the Sixers are in the Eastern Conference playoff picture.
"Since my arrival, I have been evaluating every aspect of the organization and I believe that Coach Cheeks deserves a great deal of credit for developing our players, putting them in a position to succeed and showing improvement every day," Philadelphia General Manager Ed Stefanski said in a release.
Before he joined the Sixers, Cheeks was head coach at Portland, building a 162-139 record and two playoff appearances in 3 1/2 seasons. Cheeks played in the NBA for 15 seasons, including 11 with Philadelphia, where he was a member of the 1982-93 NBA championship team.