Puel, 53, originally had a three-year contract when he took the reins of the Ligue 1 club in 2012, but is assured of another season in charge.
Nice only survived relegation to Ligue 2 by two points in 2013-14, with Puel's best season at the helm coming in his first year as he steered them to fourth spot.
After nine games in 2014-15, Nice sit in 11th spot on 14 points - just one point behind third-placed PSG.
Nice president Jean-Pierre Rivere was quoted as saying he would extend Puel's contract amid the club's seven-game losing streak last season, and he has come through with his promise.
"Claude Puel, whose accomplishments in training have marked the course, was a natural to lead this battle plan," a translation of the club's statement read.
"The outstanding fourth place in 2012-13 and development of many young players trained in Nice and thrown into the deep [end] testified the merits of the decision [to keep Puel] more than two years.
"Fed with the same ambitions, the club and its head coach today naturally continue to build the future together."
Nice are unbeaten in their past three domestic outings, drawing with Montpellier after wins over top-four aspirants Monaco and Lille.
Next up for Puel's men is a home game against Bastia on Saturday.
