Blanc, who took over at the Parc des Princes last June after Carlo Ancelotti left for Real Madrid, has come under criticism from some quarters since PSG's UEFA Champions League quarter-final exit at the hands of Chelsea.
Speculation had suggested that Blanc could be set to leave the capital club, despite leading PSG to their second successive Ligue 1 title and the Coupe de la Ligue trophy this term.
However, PSG president Nasser Al-Khelaifi insisted that Blanc would be staying with the club after the title was clinched on Wednesday.
And PSG have now affirmed that commitment to the former France and Bordeaux boss, who has put pen to paper on a one-year extension.
Blanc told the club's official website: "I am very happy to continue with Paris Saint-Germain. I want to be a part of this project over the long term, the most ambitious project in European football. Together, we will dream bigger."
Meanwhile, Al-Khelaifi insisted that the decision to extend the 48-year-old's deal is deserved given the success they have enjoyed while playing good football.
"It is perfectly justified to show our confidence in Laurent Blanc," Al-Khelaifi said.
"We are very happy with his results this season, as well as the very attractive football the team has played. We are convinced we will win a lot more trophies together."
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