The extension means McCaffery is now signed with the school through the 2019-2020 season. He will earn $1.8 million as a base salary this season.
McCaffery has been the Hawkeyes coach since 2010 and has accumulated a 74-63 record in four seasons. After being the NIT runner-up in 2013, Iowa went 20-13 last season, reaching the NCAA tournament before falling in the first round to Tennessee.
"Fran's passion, commitment, and abilities, continue to move the Hawkeyes in the right direction," said director of athletics Gary Barta. "I'm excited about this season and beyond."
Iowa was picked to finish seventh in the preseason Big Ten media poll and is ranked No. 25 in the preseason Coaches Poll.
The Hawkeyes begin the 2014-15 season on Friday night at home against Hampton.
- Molly Geary