The Ravens did not release details of the deal but the Baltimore Sun newspaper said the extension was for three years, which would see him with the team through 2014.
The 48-year-old Harbaugh, whose current deal ran out at the end of the 2011 season, has reached the playoffs in each of his three seasons in charge at Baltimore.
"We have a lot of great people who are Ravens. I'm proud to be a part of this," Harbaugh told the team's official website (http://baltimoreravens.com).
"We all push each other and pull together. It's about the team and we plan to be a championship team."
Baltimore was 12-4 during the regular season this year and lost to the Steelers 31-24 in the divisional round of the playoffs.
Prior to joining the Ravens, Harbaugh spent nine years with the Philadelphia Eagles as special teams coordinator.
(Reporting by Simon Evans in Miami; Editing by Steve Ginsburg; To query or comment on this story email firstname.lastname@example.org)