Brisbane confirmed Fagan's new deal, which is set to take him beyond a decade in the role, on Thursday morning.
It is just reward for delivering the club's first premiership in 21 years, after inheriting the league's worst team in 2016.
"Back when I started I was probably just hoping I might get to a second contract," Fagan said in a club video.
"Fortunately, even though we had a couple of quiet years on the win scene my first two years, the club backed me in and they've been backing me in ever since.
"So it's an honour to be able to continue on coaching this group.
"We enjoy working together, I think, and we look forward to trying to get a bit more success together."
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The Lions backed Fagan despite falling short in multiple finals campaigns, including the 2023 grand final loss.
"It's a good lesson for not just sport, but it's a good lesson about life," he said.
"If you want to achieve things, sometimes it takes you a while and you've got to go through a few ups and downs and a few failures before you get there.
"But eight years on, we were able to do it."
Brisbane also backed Fagan through Hawthorn's racism saga.
The historic racism allegations against the club and former coach Alastair Clarkson, his former assistant Fagan and former welfare manager Jason Burt were first aired publicly in September 2022.
Current North Melbourne coach Clarkson, Fagan and Burt have all consistently and strenuously denied any wrongdoing, while an AFL investigation found no adverse findings against the trio last May.
Fagan, 63, then became the oldest coach in VFL/AFL history to win a premiership this year when the Lions smashed Sydney by 60 points in this year's grand final.
He will be 66 when his new contract expires.
Chris Fagan celebrates amongst players and fans in the rooms after Brisbane's grand final triumph. (James Ross/AAP PHOTOS)
"Extending Chris' contract was an easy decision because he has shown since we first appointed him that he was a special coach," chief executive Greg Swann said.
"His on-field record speaks for itself having led the club to a premiership this season, a grand final last year and six consecutive finals series in total.
"What is as impressive is the culture he has helped create here which sees everyone become the best version of themselves.
"He has taken this club from bottom of the ladder to a premiership, and we look forward to more success under his leadership."
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