He also won the 2015 World Cup on home soil with Australia, who currently top the ICC rankings in both test and one-day international cricket.
Lehmann's contract was due to expire in June 2017.
"I am incredibly grateful for the support and faith the Cricket Australia Board and the players have put in me," Lehmann said in a statement from CA. "I absolutely love doing this job and as far as I am concerned, it is the best job in the world.
"There is still a lot I would like to achieve in the time I have left and we have a lot of hard work ahead of us, especially with an upcoming test series in India and a home Ashes series.
"I don't just see my job as winning games of cricket. It's about continuing to grow the game from the grassroots up in Australia, and helping to grow the game worldwide."
Australia are trailing 1-0 in a three-test series in Sri Lanka and face a daunting four-match series in India next year.
Cricket Australia said the contract extension would lend stability to the team leading into 2019.
"We wanted certainty and stability for the playing group with both the coach and assistant coach contracted as we build towards the Ashes series and the 2019 World Cup," said CA executive general manager Pat Howard.
"Darren has had great success in the role and he and the national selection panel deserve a huge amount of credit for taking a relatively young side to number one in the world in two of the three formats."
(Reporting by Sudipto Ganguly in Mumbai; Editing by John O'Brien)
