The former Netherlands defender's current deal was due to run out in June 2014 but after three titles in as many years at the club, he has been rewarded with an improved contract.
The 43-year-old admitted that he was very happy with the terms of his new deal and was looking forward to the challenges that come with training one of Europe's biggest sides.
"I'm here enjoying myself and my family is happy here. I see enough challenges here," he told the Ajax website. "This new contract is exactly what I wanted. We were there quickly, because of both sides, we are very satisfied. Now I can follow up on where we are with each other and I have started looking forward to it."
Technical director Marc Overmars was also pleased that the coach had agreed terms with the club.
"It's no surprise that we wanted to extend Frank's deal. That we all have come out after a conversation says it all. It is good for Ajax that Frank remains connected to the club for longer," he added.