Financial terms of the agreement weren't released but it takes effect immediately and lasts through the 2017-18 season.
"The Bucknell men's basketball program has achieved an incredible amount of success under the leadership of head coach Dave Paulsen and I am pleased that Dave will be here to continue to grow the storied tradition of Bison basketball," Athletic Director John Hardt said.
"The passion and enthusiasm that he brings to work every day have clearly rubbed off on his team and his staff. The landscape of college basketball is rapidly changing and I look forward to working with Dave through these new and exciting challenges."
Paulsen just completed his fifth season at Bucknell. The Bison were 28-5 overall this past season, advancing to the second round of the NCAA Tournament. After a combined 21-40 record Paulsen's first two seasons, Bucknell is 78-24 with three Patriot League titles the last three.
Paulsen, 48, previous coached at St. Lawrence, Le Moyne and Williams and has a combined coaching record of 361-184 in 19 seasons. He won the 2003 NCAA Division III championship while at Williams.