The new contract adds two years to Patterson's original deal, keeping him at TCU through 2018.
Patterson's name had come up several times for other coaching jobs following the success of the TCU football program.
The Horned Frogs completed an undefeated 2010 season after beating Wisconsin, 21-19 in the Rose Bowl.
This is only TCU's second undefeated season in history, the last happening in 1938 when the Frogs won the national championship.
"Gary Patterson is an integral part of the TCU and Fort Worth communities," TCU Chancellor Dr. Victor Boschini said. "He has a great passion for the overall mission of our university and for providing our students with a positive experience, academically, socially and athletically."
In 10 seasons as TCU's head coach, Patterson has led the Horned Frogs to at least 10 wins in a season seven times, including six seasons of at least 11 wins. No other coach in TCU history has had more than two 10-win campaigns.
The Horned Frogs have posted back-to-back undefeated regular seasons and are 36-3 overall the last three years.
"I would like to thank Chancellor Boschini, our Board of Trustees and Chris Del Conte for the support they provide in allowing us to have a football program that makes TCU and Fort Worth proud," Patterson said. "Our administration's commitment to the goals we have in our program have enabled us to be successful and to keep pushing forward."
Patterson's .778 winning percentage is second nationally among active coaches with a minimum of five years experience.