He oversaw their improbable promotion to the Premier League last season through the playoffs, but has struggled to find the same sort of form in the top flight with his side languishing at the bottom of the table.
There had been speculation he was set to be replaced at the helm by Rafael Benitez, however this new deal has seemed to quell any rumours of his sacking.
In a statement, the club said: "It is now important that our focus is solely on football. As a group we are all concentrated and will do everything we can to help the team move up the league table and once again demonstrate our qualities that led us to the Premier League."
There was no quote from the head coach in the statement.
The deal comes just days after Forest were put to the sword by rivals Leicester City at the King Power Stadium as they were defeated 4-0.
That defeat was their fifth-straight defeat and they have won just once all season, which was a 1-0 victory over West Ham United back in August.
Forest also had a busy summer transfer window, signing 22 players, giving Cooper a tough job to mould a winning team in quick time.
Cooper's side will take on fellow Midlands club Aston Villa on Monday night, which you can follow with Flashscore.
