The Dutchman has won back-to-back trophies in his first two years at Old Trafford, but faced uncertainty over his position after leading the club to their worst league finish in 34 years last season.
After a performance review, United decided to stick with ten Hag and he has agreed a one-year extension on his previous contract, which was due to expire at the end of the upcoming season.
"Looking back at the past two years, we can reflect with pride on two trophies and many examples of progression from where we were when I joined," ten Hag said.
"However, we must also be clear that there is still lots of hard work ahead to reach the levels expected of Manchester United, which means challenging for English and European titles.
"In my discussions with the club, we have found complete unity in our vision for reaching those goals, and we are all strongly committed to making that journey together."
Ten Hag joined United from Ajax in 2022 and won the League Cup in his first year in England. He followed that last season with victory over Manchester City in the FA Cup final.
He stays on in the face of a major overhaul of United's soccer operations by new co-owner Jim Ratcliffe. The British billionaire bought a 27.7 per cent stake in the club in February and has hired a new CEO, sporting director and technical director in a bid to return the 20-time English champions to the top of European soccer.
"With two trophies in the past two seasons, Erik has reinforced his record as one of the most consistently successful coaches in European football,'' said United sporting director Dan Ashworth.
"While the club's review of last season highlighted areas for improvement, it also reached a clear conclusion that Erik was the best partner for us to work with in driving up standards and outcomes.
"This group of players and staff have already shown they are capable of competing and winning at the top level; now we need to do it more consistently.
"With our strengthened football leadership team now in place, we are looking forward to working hand-in-hand with Erik to achieve our shared ambitions for this football club."
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