The school didn't release terms in announcing the agreement Thursday.
Diaz is 18-9 in two seasons with the Blue Devils, winning nine games in each of his two years. Last year featured the highlight of beating Virginia in overtime in the ACC championship game, followed by a win against Arizona State in the Sun Bowl.
Duke has also gone 6-0 against instate ACC foes North Carolina, N.C. State and Wake Forest in Diaz's two seasons.
“Manny Diaz is exactly the right leader at exactly the right time for Duke University,” athletic director Nina King said in a statement from the school.
“His clear vision for Duke football, deep understanding of our student-athletes and strong alignment with campus and athletics leadership have positioned us for sustained success in the years ahead."
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Diaz previously coached at Miami, leading the Hurricanes to a 21-15 record in three seasons before he was fired as the school pivoted to hire Mario Cristobal. He left Penn State as defensive coordinator to take over at Duke in December 2023 after Mike Elko left after two seasons to take over at Texas A&M.
This story has been corrected to show the extension is through the 2031 season, not the 2032 season as originally announced by program.
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