PSG announced the news in a statement published on their website at 7 a.m. on Thursday morning.
"It is with great pleasure that I have just extended my contract as coach of Paris Saint-Germain," Blanc said.
"I would like to thank the club for the faith that has been put in me. Since the beginning, I have felt honoured to work for such an ambitious club and it is extremely satisfying to coach such talented players.
"I hope that I can continue to make Paris Saint-Germain a brilliant and respected ambassador of French football."
Blanc will now be tied to the club until the summer of 2018, something which Al-Khelaifi said he was "extremely proud and happy to see."
"Over the past three years, our coach and his staff are writing with their team a glorious page of the club's history, winning trophies and setting records," the PSG chairman and CEO said.
"All conditions are clearly there to opt for stability. I always trusted him as well as believed in his ability to keep taking our team higher each season, while at the same time having them play a beautiful style of football that our fans, and football fans in general, really enjoy."
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