The team announced the news on its Twitter account early Monday.
The extension does not come as a surprise. General manager Tim Murray indicated on several occasions that the two sides were close to completing a deal.
Nolan returned for a second stint in Buffalo in mid-November, when he was hired on an interim basis. He took over for Ron Rolston, who was fired along with GM Darcy Regier, after Buffalo got off to a franchise-worst 4-15-1 start.
The Sabres (20-45-9) remain in last place, and in the process of rebuilding from scratch.
We've got to find a way to win a game. He's played well in the minors, now he gets his opportunity. We tried [with Jonathan Bernier]. The way I look at it, you get opportunities and you make the most of it. That's what [James Reimer] did. Now another opportunity is here and Sparks ... you gotta grab it. Is he ready? We'll find out.
— Maple Leafs coach Mike Babcock to the Toronto Star on recalling goalie Garret Sparks from the AHL to start Monday in his NHL debut
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