Last season, Hughton guided the Seagulls to promotion to the Premier League, and that has been backed up with a 15th-placed finish in the top flight during the current campaign.
Brighton have wasted little time in rewarding Hughton for his achievements, with the 59-year-old's deal at the Amex Stadium now running until 2021.
Hughton told the club's official website: "I'm delighted to have extended my time with the club, and I would like to thank the chairman, the board, my staff and everyone at the club, including our fans, for the support we've had in achieving our aims.
"The setup in terms of the training ground and excellent facilities, and the professionalism of all the staff across the club gives us a platform and creates an excellent environment for us to work on a daily basis - and I would like to thank everyone at the club for their efforts this season.
"Our second season will be tougher, and we will need that spirit of togetherness to help us continue to progress - but once we've had a well-earned break and reflected on the season just gone, we will begin planning for 2018-19."
Hughton has recorded 76 wins and 46 draws from his 170 matches in charge.