Pace's extension comes on the heels of the Bears firing coach John Fox at the end of a 5-11 season. The GM's previous contract was set to expire after the 2019 season.
The Bears' record with Pace in charge is 14-34. They've finished last in the NFC North each of the past four years.
"When I look at our organization, stability is what comes to mind," Pace told reporters.
Pace's next task will be to hire a new coach, who figures to have an offensive background. He said Monday the final hiring decision will be his and that he also will retain control of roster decisions.
"What I want to tell you is when Ryan was hired three years ago, he told us that a plan to build a team for sustainable success would not be easy," Bears CEO Ted Phillips said on Monday. "But his plan to build principally through the draft to lay that right foundation made sense to us. And it still does. So, we're still committed to that plan despite our disappointing win-loss record over the last three seasons."
Pace is pleased with the rookie season of quarterback Mitch Trubisky, who started the final 12 games in 2017. But some of Pace's free agent moves have been scrutinized, including signing quarterback Mike Glennon during the last offseason.