The 54-year-old Austrian arrived at Monaco in summer 2023 and guided the club to a second-place finish and Champions League football during his first term in charge.
His contract was set to expire at the end of the 2024/25 season.
"I am very happy and proud to be a part of this project," Huetter said of extending his contract at the Stade Louis II.
Monaco are currently third in Ligue 1 and look set to reach the knock-out stages of the Champions League.
On Sunday, Huetter will have the chance to win Monaco's first piece of silverware since 2017 when his side take on Paris Saint-Germain in the French Champions Trophy.
Huetter's time in charge of the principality side has been marked by an attacking brand of football, as well as the promotion of young players from Monaco's academy into the first team.
His win-rate over the course of the 60 matches he has overseen in all competitions stands at almost 60 percent.
Prior to taking charge of Monaco, Huetter coached RB Salzburg in his native Austria, Swiss side Young Boys and Bundesliga clubs Eintracht Frankfurt and Borussia Moenchengladbach.
