The 44-year-old, who took charge of the team back in June and guided them to Ashes glory Down Under in the winter, will remain as coach until at least the summer of 2017.
"Obviously I have huge gratitude to the board and the people who make those decisions," Lehmann told Cricket Australia's official website. "And obviously the players have a bit of a say in that, I'd imagine, as well.
"It means we're going down the right path, which is pleasing. So now the challenge is to raise the bar, as we always talk about."
Lehmann is currently preparing the team for an upcoming Test series against Pakistan in the United Arab Emirates.