The club announced the agreement in a statement on Thursday but did not disclose the terms. However, British media said the contract will take him through to 2020.
The 37-year-old coach was tied to the club until 2018 but has negotiated a longer deal after a clause in his contract was triggered by last season's promotion.
Bournemouth's former defender, who has masterminded three of their six promotions, has become the ambitious club's most successful manager since taking over during the 2008/09 season.
Howe has received several plaudits, including being named the Football League manager of the decade and League Managers' Association manager of the year last season.
"I am delighted that Eddie has committed his future to the club," owner Maxim Demin said on the Bournemouth website (www.afcb.co.uk).
"Eddie and I have a very close relationship, we speak everyday and we trust each other implicitly when making decisions that affect the football club.
"The mutual respect we have for each other has helped create a unique bond at the top of the club and has acted as the foundation for all of our recent successes.
"Together we have managed to achieve a great deal in a short space of time, and I have complete faith in Eddie and his management team to establish AFC Bournemouth in the Premier League over the coming seasons."
Bournemouth are 15th in the standings with eight points from eight games in their first top-flight season. They visit leaders Manchester City, who they trail by 10 points, on Saturday.
(Writing by Ken Ferris; Editing by Greg Stutchbury)
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