"There is no question we are on the right track in all facets of the football program," De Carolis said in El Paso, Texas, where the Beavers prepared for a New Year's Eve Sun Bowl clash with the University of Pittsburgh.
The contract is written so that Riley will automatically get a one-year extension for each bowl appearance.
"We have a lot of confidence in Coach Riley to lead us for future seasons," De Carolis said.
Riley coached the Beavers in 1997 and 1998, left for an NFL job and returned to Oregon State in 2003. His record for the eight years at OSU is 55-42, including 8-4 this season.
The Beavers have five bowl appearances in the past six years.
"I have a terrific job at a place that I truly love," Riley said. "The entire coaching staff has built a program in all areas that we are proud of. I look forward to many more successful seasons as the coach of this team."