Elway, 53, had a Hall of Fame career as a quarterback for the Broncos, taking the team to Super Bowl titles each of his last two seasons -- 1997 and '98. He joined the Denver front office in January 2011. The new deal runs through the 2017 season.
Since Elway became part of the team's front office, Denver is one of five NFL to make the playoffs each of the last three seasons, winning the AFC West title each year.
The Broncos tied for the best regular-season record (13-3) in 2013, advancing to the Super Bowl, where the Seattle Seahawks beat them 43-8.
"Our organization is extremely pleased with the work John Elway has done in his three years since rejoining the Broncos," team President Joe Ellis said in a release on the team's website. "He has demonstrated great vision and leadership in his role, assembling a championship-caliber team and positioning it for sustained success. We are very confident in the direction of the Broncos with John Elway leading our football operations."
"I am grateful for the opportunity that I've been given with the Broncos," Elway said. "Our goal is to continue building on the culture of winning established by (owner) Pat Bowlen, and we remain relentlessly committed to delivering a world championship to our fans."