Terms of the deal were not disclosed.
"Brad is an accomplished coach and an outstanding person," Celtics owner Wyc Grousbeck said in a statement. "We are proud to have him lead our team forward in our quest for Banner 18."
Stevens has coached the Celtics since 2013-14. He owns a 318-245 regular-season record with Boston and a 27-29 mark in the postseason. The 17th head coach in the legendary franchise's history, he's the fifth Celtics bench boss to win at least 300 games at the helm.