Schiano, who received a seven-year extension to 2012 in December 2005, is now signed through 2016. His total compensation package will rise from about $1 million to $1.5 million per year.
"I consider it a privilege and honor to be the head coach at Rutgers and look forward to leading this program for a long time," Schiano said in a statement. "Our goal remains to develop Rutgers into a national championship program."
Schiano was scheduled to hold a conference call at 5 p.m.
Schiano, hired in 2000, orchestrated Rutgers' rise from one of the nation's worst programs to a top-10 team last season. He led the Scarlet Knights to their first bowl appearance in 27 years in 2005 and its first-ever bowl win last season.
Last season, Rutgers won its first nine games, rose to a highest-ever No. 7 ranking in The Associated Press poll and defeated Kansas State 37-10 in the Texas Bowl. The Scarlet Knights finished 11-2 and were within a triple-overtime loss at West Virginia of playing in a BCS bowl.
Rutgers went 7-5 and reached the Insight Bowl in 2005. In the eight seasons before Schiano arrived, Rutgers was 9-46-1 in the Big East. In the last two seasons they were 9-5 in the conference.
"What Greg has accomplished in his six years at Rutgers is truly one of the outstanding coaching efforts in college football history," said athletic director Robert E. Mulcahy III, who hired Schiano and gave him a two-year extension in 2002 even though Rutgers had lost 20 of 23 games in his first two seasons.
A former assistant at Miami, Schiano was rumored to be the top candidate to replace fired Larry Coker there, but took his name out of consideration in December.
Rutgers returns 13 starters for next season including Heisman Trophy candidate Ray Rice, who rushed for a school-record 1,794 yards last season, junior quarterback Mike Teel and All-American defensive tackle Eric Foster.
The Scarlet Knights recently released a schedule that includes eight games at Rutgers Stadium, where they were 6-0 last season.