Athletic Director Steve Pederson said the move will keep Dixon at Pittsburgh through the 2022-23 season.
There had been reports the coach was being considered for a vacant position at the University of Southern California.
"Pitt and Pittsburgh are home," Dixon said in a release. "My family and I feel blessed to be part of such a great institution and wonderful city. It is the people who truly make a place special."
Dixon collected the extension after taking the Panthers to the NCAA Tournament for the ninth time during his 10 years behind the bench. They were eliminated by Wichita State in Thursday's second round.
In his decade at the school, Dixon, 47, has amassed a 262-86 overall record.
"Very few programs can match the sustained success that Pitt basketball has achieved during the past decade under Jamie Dixon," Pederson said. "As we move forward as a member of the Atlantic Coast Conference, our future has never been brighter or provided more opportunity."