Pioli put pen to paper on a two-year deal to replace the sacked Marco Giampaolo at San Siro in October 2019.
The former Fiorentina boss led AC Milan to second in Serie A behind city rival Inter Milan last season, sealing UEFA Champions League qualification for the first time in seven years.
Pioli on Friday signed a contract to keep him at the club until the end of the 2022-2023 campaign.
The 56-year-old told Milan TV: "I hope to be able to experience many emotions on this bench, we are ambitious and we want to continue like this."
Milan is second in Serie A, level on points with leader Napoli, after amassing 32 points from its opening 12 games for the first time in the three points for a win era.
It was beaten 4-3 by Fiorentina in a thriller last weekend, but responded by keeping its hopes of qualifying for the UEFA Champions League Round of 16 alive with a 1-0 win at Atletico Madrid on Thursday (AEDT).
Milan director and club legend Paolo Maldini said of Pioli's new contract: "There is a thrill of continuing a path that is bringing us great results.
"We don't want a team to win for just one year, but for a long time. We want to bring Milan back to being competitive."
He added: "We do not renew only with the coach Pioli, but also with the person. There is great harmony between us, there may be problems, but we will know how to overcome them."