The 48-year-old's position had come under scrutiny after the capital club's Champions League exit but he has since led the club to a league-and-cup double
The former France international's future had been cast into doubt after the capital club's disappointing Champions League quarter-final exit at the hands of Chelsea last month.
However, Blanc has subsequently led PSG to a Coupe de la Ligue and Ligue 1 double, much to the delight of president Nasser Al-Khelaifi.
"It is perfectly justified to show our confidence in Laurent Blanc," the Qatari stated on Thursday. "We are very happy with his result this season, as well as the very attractive football the team has played. We are convinced we will win a lot more trophies together."
Blanc, meanwhile, admitted that he was only too keen to extend his stay at the Parc des Princes after a successful debut season at the helm.
"I am very happy to continue with Paris Saint-Germain," the World Cup winner stated. "I want to be part of this project over the long term, the most ambitious project in European football. Together, we will dream bigger."