The 38-year-old’s new deal at Portman Road comes a week after it appeared likely he would reject any new offer from the club.
He had been linked with the vacancy at Brighton and was shortlisted by Chelsea as Mauricio Pochettino’s replacement, but dropped out of the race for the Stamford Bridge job on Sunday.
“I am extremely proud to have signed a new contract with the club,” McKenna told Ipswich Town’s official website, external.
“We have enjoyed incredible success together over the last two seasons and I’m excited to have the opportunity and responsibility of leading this fantastic club into its first season in the Premier League in 22 years.”
Back-to-back automatic promotions, which have seen Ipswich climb from League One back to the Premier League after a 22-year absence, made the former Manchester United assistant first-team coach one of the highest rated and most sought after managers in the English game.
Getting the Tractor Boys promoted from the Championship, and finishing just one point behind title winners Leicester, earned McKenna the League Managers Association’s manager of the year award.
He finished ahead of of Manchester City’s Pep Guardiola, who oversaw an English record fourth successive top-flight title, and Arsenal’s Mikel Arteta for the award.
With a squad largely based on the one that won promotion from the third tier in 2022-23, McKenna oversaw a second-placed finish in the Championship.
They were the division’s top scorers with 92 goals, and finished above both Leeds United and Southampton – two clubs with vastly superior budgets after being relegated from the Premier League a season earlier.
In his two full seasons at Portman Road, Ipswich have won 56 and drawn 26 of their 92 league matches, suffering only 10 defeats.
‘One of the Premier League’s best paid bosses’
Analysis – Nick Mashiter, senior football news reporter
The new deal will make McKenna one of the best paid managers in the Premier League, just a year after he won promotion to the Championship from League One.
It also provides security for Ipswich as the compensation for him and assistant Martyn Pert will increase, having previously been around £4m.
The Tractor Boys have barely put a foot wrong, acknowledging the interest would come after their impressive success but refusing to get drawn into any circus.
The united front, taking a table which including McKenna and chief executive Mark Ashton, displayed at the League Managers Association dinner last week – where McKenna won LMA Manager of the Year – underlined they always viewed this period as ‘business as usual’.
It is not a new scenario they have had to deal with. McKenna was close to joining Crystal Palace before Oliver Glasner was appointed in February, while Brighton’s interest was there even before it was announced Roberto de Zerbi would be leaving.
There was a plan to leave Portman Road – regardless of promotion – this summer but with options dwindling and a new deal on the table it was important for McKenna to make a decision and avoid upsetting his employers, given the amount of interest and speculation in him.
Ipswich need to be competitive for the Premier League and it was becom
