Holgorsen, 41, is to be paid $2.3 million this season, with more than $2 million of that in supplemental income. The agreement includes yearly raises and incentives for academics, bowl appearances, conference champions and other honors.
He was to have been paid $1.725 million this season, his second leading the Mountaineers. It was his first season as a college head coach.
"This contract brings us closer to the salaries of other major university head coaches and those within our conference," West Virginia Athletic Director Oliver Luck said in a statement.
"We have said all along we are going to pay our coach a competitive salary for a very valued and competitive position. I have full confidence in Coach Holgorsen and his staff and want them to be with us for a long time. He is the right man to lead our football program into the Big 12 and beyond."
West Virginia went 10-3 in Holgorsen's first season. The school joins the Big 12 Conference effective the fall term.
Holgorsen took over in June 2011 after the resignation of Bill Stewart, who stepped down a year earlier than he originally intended amid allegations he solicited reporters to "dig up dirt" on Holgorsen, who was his new offensive coordinator and head coach in-waiting.