Howley has become a key member of Warren Gatland's backroom staff since his appointment in 2008 and will now remain with the Welsh Rugby Union until 2016.
And the two-time British and Irish Lions tourist, who previously coached at Wasps and Cardiff Blues, is thrilled to have signed the new deal.
He said: "I have thoroughly enjoyed the time I have spent with the national team so far so I am delighted that work can now continue at least until 2016.
"As a coaching team we have achieved a lot of our aims in recent years but there are still a lot of exciting and challenging opportunities ahead.
"We have the right structures and systems in place, a team of young talent alongside some valuable experience and a mouth-watering fixture schedule.
"I am personally ambitious to become the best coach I possibly can be and it is fantastic for me to be able to continue to advance my skills here in Wales with the Welsh team.
"As a coach I understand the importance of continuity and I know the strengths and weaknesses of our players and the youngsters who will be challenging for selection in the near future.
"I want to spend the next few years focused on Welsh success and I am determined to develop my own repertoire of skills so I can make a valid and worthwhile to rugby in Wales.
"I am a proud Welshman and anyone who works with me knows I want nothing more that success for Wales.
"The Rugby World Cup proved to us as a coaching team that we are heading in the right direction and that just inspires me for the future."
Howley, who won 59 caps for Wales, will also now work with head of rugby Joe Lydon to help develop the national academy age grade teams.
Gilbert has released a new line of rugby cleats. The Gilbert Virtuo 8S is part of the exciting new product. Check it out.
The entire All Blacks apparel line has been updated for 2013/14. Check out the New Zealand All Blacks polo.
The Nike Tiempo is a solid rugby cleat and one of few styles still made from full-grain natural leather.
The Gilbert Blitz 8S rugby cleat is a great cleat at a great price of $69.99. Get a new pair of cleats today.
A cool looking all black rugby cleat with the high performance adidas is known for. Get in the Gear!
Wear the crest of the British and Irish Lions on your t-shirt. A great look for the summer.
The All Blacks Performance t-shirt is black with hints of blue from the training jersey. Very Cool.
The New Zealand All Blacks training jersey for 2013/14. Get in the Gear!
The USA Rugby Pro Alternate rugby jersey is perfect for any fan of the Eagles. Get yours to wear during the summer Test matches.
The NEW All Blacks 2013/14 jersey has arrived at World Rugby Shop. Dare to wear the colors of the All Blacks.