Reed started his third season at the helm of the Eskimos with a 39-18 home loss in Week 1 to the Saskatchewan Roughriders. Edmonton will look to even its 2013 record on Sunday when it visits the Hamilton Tiger-Cats.
All told, Reed has an 18-18 record with the Eskimos, including a 7-11 campaign in 2012 that saw Edmonton fall to the Toronto Argonauts in the East Division semifinal.
"This extension gives us stability going forward," Eskimos general manager Ed Hervey said in a release. "Leadership is critical to a young football team for success and I know our players work extremely hard for and are committed to coach Reed."
An Eskimos defensive back from 1995 to 1999, Reed spent 10 seasons as an assistant in the CFL before being named the club's 19th head coach in December 2011.
Terms of the contract extension were not released.