The two-time Pro Bowler was entering the final year of the contract he signed as a free agent in 2011. The new deal will keep him in Houston for the next three years. The deal is worth $22 million with $11.5 million guaranteed.
The 31-year-old Joseph started each game for the Texans last season and had a career-high 75 tackles and two interceptions.
In his four years in Houston he has 240 tackles, 11 interceptions and has defended 52 passes. He also has returned two interceptions for touchdowns, forced three fumbles and recovered two.
His 11 interceptions with the Texans are tied for second in franchise history.
Joseph was a first-round pick of the Bengals in 2006 and spent his first five seasons in Cincinnati.
The Texans have been aggressive in shoring up their secondary this offseason as they re-signed starter Kareem Jackson to a lucrative contract in free agency and then drafted Wake Forest cornerback Kevin Johnson in the first round of the draft.
That duo, along with Joseph, should account for the majority of cornerback snaps for the Texans during the 2015 season.