The deal, signed Saturday, is worth just under $7 million and begins Jan. 1. When Ollie was hired in September, he was signed for just one season.
"As I said in my first press conference, I want to be here a lifetime and this is a step, hopefully a great step, in the program moving forward," Ollie said.
Ollie, who turned 40 on Thursday, was hired after Hall of Fame coach Jim Calhoun retired. His original deal had a pro-rated value of just over $465,000, the school said.
Ollie has led UConn to a 9-2 record entering Saturday's game against Washington despite losing five underclassmen from last year's team after it was announced that the Huskies were academically ineligible for the upcoming postseason.
Ollie was greeted with a standing ovation as he walked on the court Saturday night and the student section chanted his name.
"He's shown that he can coach, that he can lead this team on the court, and academically," athletic director Warde Manuel said. "He's the epitome of an UConn Husky."
Ollie, who played point guard for Calhoun from 1991-95, was his former coach's hand-picked successor. He became an assistant at UConn in 2010, after 13 years as an NBA journeyman.
But, he had never been a head coach on any level. Manuel said that's why he waited before tendering a multi-year offer, even though he knew it could have a negative impact on recruiting.
"I'm sure it didn't help, the short-term nature of the deal," Manuel said. "But I wanted the opportunity to see Kevin and get a sense of who he was for the long term."
Ollie has quickly established himself with his upbeat and energetic style, running practices that focus on conditioning and accountability.
"Kevin moved gracefully and seamlessly into this position of immense responsibility over the course of the fall," school President Susan Herbst said. "He demonstrated to us that he is a genuine leader of extraordinary talents."
The contract also includes some stiff penalties should UConn in the future again fail to meet the minimum standards for the NCAA Academic Progress Rate.
Ollie would forfeit two weeks' salary and all postseason payments. Two consecutive years of substandard APR scores would be grounds for termination.
"I agreed to it because I have a belief system in my student athletes," Ollie said. "We're students first and we're going to get it done."
Those sanctions would be eliminated from the contract once UConn's four-year APR climbs above 930, Manuel said.
Ollie will receive $1.2 million in 2013. His base salary will be $400,000 and rest will be for speaking and media appearances. The payments increase annually to $1.34 million by 2017.
Calhoun, who is vacationing in Florida, issued a statement saying the hiring makes him feel "very good about the future of UConn basketball."
UConn women's coach Geno Auriemma, who is making $1.8 million this year and is in negotiations for an extension, said Ollie remains in a tough position, but will have the support of the entire athletic department.
"He's going to do the right thing. He's already proven that," Auriemma said. "And now he's going to get an opportunity to recruit and he's going to get an opportunity to coach."
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