Seventh-placed Sunderland have lost three successive league games this month but remain on course for a possible Europa League place after accumulating 37 points from 27 games.
Bruce, 50, left Wigan Athletic to move to the Stadium of Light on a three-year contract in June 2009.
Sunderland chairman Niall Quinn told the club's website: "It was hugely important to bring stability to this football club and I firmly believe that in Steve we have the man to do just that.
"In only 18 months he has reshaped our squad beyond recognition, bringing in some fantastically talented players, many of whom are young and desperate to achieve and improve."
Bruce broke the club's transfer record to sign striker Darren Bent from Tottenham Hotspur for an initial 10 million pounds soon after joining.
