The 57-year-old began a second spell with Genoa in September 2013 and has been rewarded for a successful campaign with the Grifoni.
Gasperini’s previous deal expired at the end of next season and a statement from Genoa read: “The coach has reached an agreement for the extension of his contract.
“The deal will run until 2017, with the option to extend it for a further year.”
Gasperini guided Genoa from 2006 until 2010, leading the club to promotion to Italy’s top flight in his first season with the team.
He then steered the club to a fifth-placed finish but was dismissed following a poor start to the 2010-11 campaign.
“I’m delighted,” he said. “It’s destiny that Genoa is in my life. The intention is to build a competitive team for the new season and to reach our goals.
“It would be nice to start next season with the same enthusiasm as we finished this one.”
Genoa are hoping to play in next season’s Europa League but were denied a UEFA licence by the Italian Football Federation after missing a deadline and failing to name a suitable stadium to play in.
They have appealed the decision.