The 45-year-old arrived last season and guided Rangers to a 15th placed finish in the Championship, finishing 11 points, and has now extended his stay.
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The length of the deal has not been disclosed by the club, per Sky Sports.
Stephen told the club's website: "I'm convinced that at the end we can give a lot of joy to the fans - it's really important.
"We know exactly that the objective of the club in the mid to long term is to reach the play-offs - and more than access the play-offs, to play in the Premier League.
"But we have to continue to build something very strong together, on and off the pitch, in terms of mindset, in terms of working, and how we want to develop the players."