Frank will be back despite New Jersey's failure to qualify for the NBA playoffs for the second year in a row.
"If you get rid of a good coach, you've got to get a good coach," team President Rod Thorn said at a news conference. "And in my mind he's a good coach. He's done a good job here. I think this past year we weren't expected to do very well and we ended up doing better than most people expected us to. I think the players understand that he knows what he's doing and they play hard for him."
Frank, a native of Teaneck, N.J., is owed $4.5 million next season.
He compiled a second straight 34-48 record, good for an 11th place finish in the Eastern Conference.
Thorn made no comment on which players would be back, including high-scoring guard Vince Carter and backcourt mate Devin Harris.