The deal announced Thursday morning keeps Paulsen under contract through the 2017-18 season. Financial terms were not disclosed.
The Bison finished 28-6 this year to set school and Patriot League records for victories. Their season came to an end with a 68-56 loss last week to Butler.
Bucknell has developed a reputation for staunch defense under Paulsen after holding opponents to 37 percent shooting and 57 points a game. Senior center and career scoring leader Mike Muscala is a potential NBA draft pick who had 22 double-doubles this season while also being honored as the league's top scholar-athlete.
Counting a trip to the 2012 NIT, Bucknell has had three straight postseason appearances -- an impressive run for the brainy school from the academic-minded Patriot League.
Paulsen in a statement thanked university administrators. "I have never had more fun coaching than I did with this year's team," he said.
Paulsen's name recently surfaced in Chicago-area media reports as a potential candidate at Northwestern to replace fired coach Bill Carmody. The Wildcats hired longtime Duke assistant Chris Collins on Wednesday night.
Paulsen declined to answer questions about anything other than Bucknell in a phone interview Tuesday night with The Associated Press -- though he didn't sound like someone who was leaving central Pennsylvania anytime soon.
"We were one of the best mid-major programs in the country," Paulsen said. "The challenge is going to be: Can we maintain that status? That's going to be a matter for everyone in the program -- coaches and players really stepping up."
Bucknell is 78-24 over the last three seasons, with a Patriot League record three straight outright regular-season titles.
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