The 65-year-old coach steered Italy to glory at the 2006 World Cup finals in Germany but endured a poor second spell in charge of the Azzurri which culminated in their early exit from the 2010 tournament in South Africa.
He moved to Guangzhou in May 2012 and has since won two Chinese Super League titles, the Chinese FA Cup and the 2013 AFC Champions League.
Together with his coaching team, he has been rewarded with a new contract that ties him to the Tianhe Stadium outfit until November 2017.
A statement published on the club's Twitter account read: "@MisterLippi & teams signed a new 3-year deal with @GZEvergrandeFC."
Former assistant coach Massimiliano Maddaloni will be the team's executive coach, and Narciso Pezzotti will be the new assistant coach.
The new Super League season starts next month with Guangzhou opening their title defence against Henan Jianye on March 8.