Schmidt, who previously managed the club's under-23 side, stepped into his current role following the sacking of Kasper Hjulmand in February.
Mainz were on a run of one victory in 13 Bundesliga matches at the time of Hjulmand's dismissal, but Schmidt's record currently stands at three wins in eight, having suffered just two defeats.
"We have found the time to commit to the agreement that had already been made orally and with a handshake," he said. "I'm really happy about the confidence placed in me by this contract.
"It is also a great challenge to continue the work done by my predecessors and the entire club."
Mainz sit 11th in the Bundesliga and host Schalke on Friday.
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