Terms of the deal weren't announced, but industry sources told NBA.com the deal was worth $35 million, which would make Rivers, 49, the highest-paid coach in the league.
"We are extremely happy to have Doc at the helm of the franchise for the foreseeable future and we firmly believe that he is the best coach in the NBA," Celtics President of Basketball Operations Danny Ainge said.
Rivers has spent seven seasons with the Celtics, during which they have won four straight Atlantic Division crowns.
They were ousted in the Eastern Conference semifinals in five games last week.
"This is where I want to be," Rivers said. "This is where I should be. I have a great partnership with Danny and the ownership group. We are all dedicated to win."