The manager guided the club to a record points haul in the Championship last season, only to be denied promotion to the Premier League by QPR in the play-off final
The former England head coach arrived at the iPro Stadium in September last year and helped the club reach the play-off final following a third-place finish, only to miss out on promotion to QPR.
Derby's haul of 85 points is a club record and the hierarchy have moved to keep hold of the men responsible, with first-team coach Paul Simpson and goalkeeping coach Eric Steele also handed fresh terms.
"Derby County is a club that is close to all our hearts and we're all delighted to commit our futures to what continues to be an exciting project," McClaren told Derby's official website.
"The fans have bought into what we're trying to achieve and their backing has been nothing short of magnificent.
"The club is continuing to grow and we're all happy to be part of it; the future is exciting for Derby County.
"Last season ended in heartbreaking fashion but we all have our focus on the future now and there's a real excitement for the season ahead."
McClaren has a long association with Derby, having featured as a player between 1985 and 1988 before serving as Jim Smith's assistant in the mid-1990s.