Tippett had reportedly wanted to wait to see what happens with the uncertain ownership situation before making a decision to stay with the Coyotes.
The Coyotes have gone 156-96-42 and made the playoffs three times in Tippett's four seasons with the team, despite the fact that the franchise was owned by the NHL and had strict financial restrictions during that time.
In 2011-12, the Coyotes went 42-27-13, won the franchise's first division title and advanced to the Western Conference finals for the first time in team history.
Earlier this year, the team reached a long-term deal to extend the contract of general manager Don Maloney.
Tippett was out of town Friday, and the team scheduled a news conference on Monday for him to talk about the new contract.
In a statement released by the Coyotes, the 51-year-old coach said he's "thrilled to stay with the Coyotes."
"Don has done a very good job of assembling a great staff and group of players here and I like the direction we are headed," Tippett said. "We've started to build a strong foundation and we are both looking forward to continuing to build a winning team here in the Valley and taking the next step as a first-class organization."
Tippett has long talked about the need to settle the ownership issue.
The NHL bought the team in U.S. Bankruptcy Court in 2009 with the stated intention of finding a buyer to keep the franchise in Arizona. After four seasons, there still is no new owner.
But the league has agreed to sell to Renaissance Sports and Entertainment, a group headed by Canadian investors, contingent on a new lease agreement with the city of Glendale, which owns Jobing.com Arena, where the team plays. The Glendale city council was meeting in executive session Friday to discuss a lease proposal.
Maloney said re-signing Tippett was critical to the team's future.
"Elite coaching is required to win on a consistent basis and Dave is one of the best at his job in today's game," Maloney said. "His work ethic, attention to detail, communicative skills and patience make him an ideal fit with our group as we built a franchise capable of winning the Stanley Cup."
With the franchise in disarray after a summer in bankruptcy court, Tippett was hired just nine days before the start of the 2009-10 season. Still, the team went on to finish 50-25-7, breaking the franchise record for wins and points (107), a performance that earned Tippett the Jack Adams Trophy as NHL coach of the year.
Tippett was head coach of the Dallas Stars from 2002 to 2009, compiling a 271-156-65 record and leading the team to two Pacific Division titles. The Stars made the playoffs in five of his six seasons with Dallas. He was also an assistant coach for the Los Angeles Kings for three seasons.
In 10 seasons as an NHL head coach, Tippett has a record of 427-252-107. His team made the playoffs in eight of those 10 seasons.
The Coyotes failed to make the playoffs in this lockout-shortened season.
Tippett, born in Moosomin, Saskatchewan, played 11 years in the NHL for Hartford, Washington, Pittsburgh and Philadelphia.
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