The new deal will keep the 46-year-old in charge at Carlisle until the summer of 2013.
He told the club’s official website: “I have thoroughly enjoyed my time at the club and I am delighted that it will continue.
“Our aim has to be to continue to improve and take this club into the Championship. That won’t be easy, but I am very ambitious, as are the rest of my staff, and I know I have the full backing of the board in trying to achieve that.”
Cumbrians chairman Andrew Jenkins added: “We’re delighted that we have sorted this out as we feel that he is doing a great job and his team are going from strength to strength.”
