MacLean has been a finalist for the Jack Adams Trophy as top NHL coach in each of the two years as Senators coach, winning the honour last month for his work in 2013.
The Antigonish, N.S., native guided Ottawa to a playoff berth even though the team went long stretches without the services of defencemen Erik Karlsson and Jared Cowen, top forwards Jason Spezza and Milan Michalek, and goaltender Craig Anderson.
Ottawa finished with a 25-17-6 record and dispatched Montreal in the first round of the playoffs. The Sens were eliminated in the second round against Pittsburgh.
"In two years, Paul has made a significant impact on the entire franchise, both on and off the ice," Senators general manager Bryan Murray said in a statement. "We feel that under Paul's direction we have been able to develop into a team that is competitive each and every night and we are confident that he is the person we want behind the bench to lead us to our goal of being a championship level team."
MacLean, 55, will now be under contract through the 2016-17 season.
MacLean was a former NHL forward who then embarked on a coaching career that included six years as an assistant on Mike Babcock's staff with the Detroit Red Wings.