The 40-year-old is just short of two years in the job and has amassed over 100 matches in charge of the club when accounting for his caretaker spell.
Heckingbottom has been linked with a couple of high-profile jobs this season, including the Sunderland position in November, but he remained in South Yorkshire and has now agreed fresh terms.
Speaking upon the announcement of the contract extension, the length of which has not been disclosed, chief executive Gauthier Ganaye said: "This is recognition of Paul's hard work for the last two seasons.
"Coaching and development is a large part of our model as well as targeting young players so we need to have a head coach who embraces this philosophy and knows how to develop these players, while competing in one of the most competitive leagues in the world.
"This new contract shows his commitment to the project that the club is embarking on. He believes in the plans we have in place at Barnsley Football Club like we all do. I look forward to continuing to work closely with Paul as we go into a really important last few months of the season."