Bylsma has agreed to a three-year extension to his exiting deal. Financial terms weren't released.
The Penguins are 39-21-8 for 86 points this season, which is two points behind Philadelphia for the Eastern Conference lead. Pittsburgh has remained near the top of the standings despite losing stars Sidney Crosby and Evgeni Malkin to injury.
"Dan has very quickly established himself as one of the best coaches in the National Hockey League," Penguins General Manager Ray Shero said. "He has been a perfect fit for our organization since Day One and we look forward to having him leading our team for the next three seasons."
Bylsma took over the team as interim coach on Feb. 15, 2009, and guided the team to the Stanley Cup title. After that he was hired as the head coach. The team is 104-51-19 under Bylsma.