Payten orchestrated a miraculous turnaround at the Cowboys after a 15th-place finish and just seven wins in his first season in charge in 2021.
A year later, he took the Cowboys to a record-equalling 17 wins as they finished the 2022 campaign in third place.
His contract was set to finish at year's end and the extension recognises Payten for successfully rebuilding the side and developing the Cowboys' young talent.
Chairman Lewis Ramsay said the three-year deal was "just reward for the vision, passion and dedication" Payten had shown in the role.
The 44-year-old was an assistant at the Cowboys when they won their maiden premiership in 2015.
He moved to New Zealand Warriors in an assistant role in 2018 and two years later rose to his first NRL head coaching gig as Stephen Kearney's interim replacement.
Later in 2020 he struck a three-year agreement to coach the Cowboys and return to north Queensland.
"North Queensland is our home," Payten said.
"The first 12 months were lean in terms of results, but we are starting to see the rewards of some decisions we made during that 2021 season around blooding young players.
"Coupled with the elite talent we have in our squad, I am confident we are heading into a truly exciting time at this club.
"I always had an ambition to come back to this club and I have no desire to be anywhere else."
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