 Blackwell took over from Bryan Robson in February 2008
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Sheffield United manager Kevin Blackwell has agreed to stay with the Championship side.
Blackwell had been considering his future following Monday's 1-0 play-off final defeat by Burnley.
Blades chairman Kevin McCabe said: "Defeat in the play-offs is cruel but the fight goes on and, like me, Kevin is up for the challenge.
"Kevin is motivated and is up for the task of getting the Blades promoted next season."
McCabe added: "The club, players and the fans all took a blow after the Burnley game. We had been there before and we did not want to see another defeat.
"Kevin is no different. He has taken this club forward on the playing side from a difficult position in the league the season before last to the edge of the play-offs.
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606: DEBATE
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"This season we have finished third in the league and narrowly missed out on automatic promotion.
"The club does lose its parachute payment for next season but we have built solid financial and off-the-field foundations at Bramall Lane which will enable us to compete.
"Our business model will enable us to invest not only at academy level, where we have seen young players like Kyle Walker and Kyle Naughton evolve and come through to the first team, but also remain competitive in the transfer market.
"We have exciting plans to further enhance our stadium and most of all the backing of our supporters who have renewed their season tickets at an unprecedented level."
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