The saga over the coaches contract has been a long one, though Mosimane said in recent months that a deal was close.
The renewal was confirmed by Sundowns owner Patrice Motsepe at a media conference on Thursday.
“I am very happy that the board of Sundowns has decided to renew. I have always said I want to keep him at Sundowns, he is my Alex Ferguson,” Motsepe said.
Mosimane has been in charge of Sundowns since 2012, winning four league titles and the 2016 CAF Champions League.
The side are four points behind Absa Premiership leaders Kaizer Chiefs this season, but have a game in hand.