Redknapp said: "Since returning to Fratton Park I have had nothing but the utmost support from the owner Sacha Gaydamak and chief executive Peter Storrie.
"They have backed me 100% in the transfer market and I am genuinely excited about the group of players I have here with me now.
Redknapp first took charge at Fratton Park from March 2002 until November 2004, and then again from December 2005 - a season in which the club narrowly avoided relegation.
He has been in charge for 197 games at Fratton Park, winning 87 and losing 64 and being victorious in 44 out of 124 outings in the Barclays Premier League.
Chief executive Peter Storrie added: "Harry has done a great job, first rescuing the club from the jaws of relegation and then building a team now strong enough to push for a European place.
"I know Harry has been impressed by Sacha's plans for the club not only on the pitch but also off it. Obviously it's a great coup for us to have one of the best managers in the business pledging his long-term future to the club."