Staley's Owls advanced to the second round of the NCAA tournament, losing to No. 1 Duke in Raleigh, N.C.
It was the fifth NCAA appearance in Staley's seven seasons in charge of the program. Her teams have won three straight Big Five titles. They also have won four Atlantic Ten Conference crowns since her debut as a coach in May 2000.
Her record is 151-67, and her teams have won 14 straight Big Five games.
Terms of the deal were not announced, but the 36-year-old Staley, whose contract was set to expire in July, was believed to be making about $250,000, not including incentives.
"Dawn has made Temple one of the top women's basketball programs in the nation, and she has done it the right way," new Temple president Ann Weaver Hart said in a statement.
Two seasons ago, the Owls became nationally ranked for the first time as the team set a school record with 28 wins against four losses.
The Owls remained in the rankings all last season when Candice Dupree became an all-American. She was selected sixth overall by the Chicago Sky in the WNBA draft.
Senior forward Kamesha Hairston, who has been invited to the WNBA predraft camp in Cleveland, has been projected as a potential first-round pick in Wednesday's draft.
Bradshaw cited Staley for inspiring "young women throughout her life, and giving back to the community through the Dawn Staley Foundation. She is a Philadelphia icon."
Staley, a 1988 graduate of Murrell Dobbins High, was recently named an assistant Olympic coach to Anne Donovan for the 2008 Games in Beijing. She won three Olympic gold medals as a player.
She starred at Virginia, leading the Cavaliers to three straight Final Four appearances from 1990 to '92.
Contact staff writer Mel Greenberg at 215-854-5725 or firstname.lastname@example.org.