The new deal will keep Clough at Pride Park until the summer of 2015.
“We are all delighted that our futures have been sorted out and that we have the opportunity to continue the work of the last two-and-a-half years of trying to improve this club,” he told Derby’s official website.
“From day one we knew this was going to be a long term project and it is still very much a work in progress.
“This new deal is not about any individual, it is about a collective effort from a group of people who have worked extremely hard to change the culture and mentality of the football side from top to bottom.
“We have shared values throughout the organisation of working hard every day and making sure everyone gives their best, which is exactly what the fans deserve and demand from anyone lucky enough to represent Derby County.
“We are seeing signs of improvement all the time now, at every level of the club, and we believe there are some good times ahead of us.”
Clough has recently been linked with a move to Nottingham Forest prior to Steve Cotterill’s appointment at the club.
“Our commitment to Derby County has never been in question,” he added.
“We all love working here and care passionately about bringing success to supporters who have remained so loyal during some difficult times.
“There is nowhere else we would want to be.”
