The Argentine coach is approaching 10 years in charge at Atletico, having been appointed in December 2011, and in that time he has established the Rojiblanco as serious rivals to the big two in Spain and as a European force.
He has led Atletico to league titles in 2014 and this year, as well as winning a Copa del Rey and the Europa League twice.
The 51-year-old was contracted until 2022 and it emerged earlier this year that Atletico were making moves towards prolonging his stay.
Confirmation of his new deal came on Thursday, as the club said in a statement: "Diego Pablo Simeone has signed a contract extension until June 30, 2024.
"Since the Argentine joined in 2011, we have enjoyed one of the most successful phases of our club's history – winning eight trophies in the process.