Hughes was appointed in March as the replacement for Mauricio Pellegrino, with the Saints in danger of dropping to the Championship.
Wins over Bournemouth and relegation rivals Swansea City either side of a draw with Everton proved enough to keep Southampton up despite a final-day defeat to Manchester City - Hughes' side finishing in 17th, three points above the drop zone.
And Southampton announced on Friday that Hughes has penned a deal for the next three years, while assistant manager Mark Bowen and first-team coach Eddie Niedzwiecki have also agreed long-term contracts.
"Mark, Eddie and I are thrilled to have signed long-term contracts with the club," said Hughes. "It was the only option we considered, having spent the last eight weeks with the club.
"Now it is vital that we take the unbelievable support we received from the fans during the last few games into next season. The staff and the players will work hard every day to deliver the success this club deserves, and with everyone pulling together we will achieve our goals."
Southampton's survival was secured at the expense of Stoke City, who Hughes led from 2013 to January 2018.
And the Saints said via a club statement that the 54-year-old deserves backing after ensuring Southampton stayed in the Premier League.
"Mark and his team had a massive impact from the first day on the players, staff and fans alike, and was able to pull together everyone involved with the club to deliver the results needed," Southampton said.
"It is important now, under Mark's leadership, for everyone to move into the new season with a renewed focus and energy alongside the continued and valuable support of our fans."