Since taking over from Declan Kidney in 2013 the former Leinster coach has presided over back-to-back Six Nations title-winning campaigns and enjoyed a series of other impressive results including victories over South Africa and Australia. In his 18 matches in charge the 49-year-old New Zealander has had 14 wins and four defeats and Ireland head into this year's World Cup ranked number three in the world.
"I appreciate the support I have had from the IRFU and look forward to the next two challenging years," Schmidt said in a statement.
"It has been great to be involved in such a player-driven environment, along with such a skilled and positive staff to support them in their quest to be as competitive as possible."
IRFU performance director David Nucifora said: "We believe that Joe is one of the leading coaches in world rugby so we are delighted that he has extended his contract and will continue to work in Irish Rugby until the end of the 2016/17 season.
"Outside of his national team duties, Joe has contributed to the development of indigenous coaches across the provincial and under-age structures as well as having a positive input into the Ireland Under 20s and women's squads."
(Reporting by Mitch Phillips, editing by Ken Ferris)
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