Therrien completed his second season in his second stint with the Canadiens. The Quebec native coached parts of four seasons with the Pittsburgh Penguins before returning to the Canadiens for 2012-13. Montreal has a record of 75-42-13 in the past two seasons.
Therrien has one year remaining on his contract, and the extension will take him through the 2018-19 season. Financial terms were not disclosed.
"Teams that have success in the National Hockey League have stability. It's an important message to the players," Therrien said Saturday. "We all want the team to progress, and the fact the organization acted to show stability in its coach like this, I take this as a nice vote of confidence."
This season, Montreal finished 46-28-8 and played in its first Eastern Conference Final since 2010, losing to the New York Rangers in six games. The Canadiens finished third in the Atlantic Division with 100 points, their highest total since 2007-08.
"What I feel is important is that we've progressed a lot in two years," Therrien said.
Therrien, 50, was originally hired to coach the Canadiens in 2000, when he took over for Alain Vigneault. Therrien was fired in January 2003 after the Canadiens got off to a 18-19-5-4 start.
"You are always making adjustments over the course of a season. You have to make sure that your message is getting through and that we manage the team's spirit," Therrien said. "Communication between the players and the coaching staff is important. Our staff will be getting together this summer to analyze the new trends in hockey. When you coach you have to be on top of things, whether it's in terms of technology, systems or personnel."
In 320 regular-season games as Canadiens coach, Therrien is 152-119-49.
"We're very happy to have agreed to a contract extension with Michel Therrien for multiple seasons. Michel is an accomplished and experienced coach who has instilled a culture of hard work in our organization while helping develop our young players," Bergevin said. "Michel and his coaching staff work in a unique and demanding hockey market, and the team's success over the last two seasons are a reflection of their excellent work. This decision reflects our desire for stability and consistency within our hockey operations department."
"I have mixed feelings on that. I would be happy if he got the opportunity to become a head coach again because I'm convinced he would do an excellent job," Therrien said. "But from a purely selfish standpoint, I'd be happy to have him back. He's a great ally for me."
LHN.com managing editor Arpon Basu contributed to this report.