The Uruguayan took over at the Stadium of Light last October after Paolo Di Canio was relieved of his duties and defied the odds to keep the club in the top flight.
Former Brighton and Hove Albion boss Poyet, who also guided his side to the League Cup final, stated after a 5-1 hammering at Tottenham in April that it would take a "miracle" for Sunderland to avoid the drop.
However, they finished 14th after a run of four consecutive wins and it was announced on Wednesday that Poyet had agreed fresh terms to tie him to the club until 2016.
Poyet told the club's official website: "I am delighted to extend my stay with Sunderland AFC, after an unbelievable season and our famous great escape.
"Stability is absolutely key to long-term and sustained success for any football club, and this new contract gives both the club and me that stability going forward.
"Now it's a different challenge for me and the club and I am relishing the next stage with Sunderland. We achieved so much last season, working together - the club and the fans - and we took many good memories from the season.
"The prospect of creating more of those memories is one which excites me, and now I cannot wait for the next chapter in my career and the history of Sunderland AFC."
Sunderland also confirmed that assistant manager Mauricio Taricco, first-team coach Charlie Oatway, goalkeeping coach Andy Beasley and fitness coach Antonio Pintus will remain in Poyet's backroom team.
