De Boer, who also played for the club and Barcelona, has agreed a deal which will keep him at Ajax until June 2017.
The former Holland international, whose deal was due to end at the end of next month, told the club website: “This new contract is exactly what I wanted.
“I’m here enjoying myself and my family is happy here. I see enough challenges here.
“We reached an agreement quickly, because of both sides, we are very satisfied.
“Now I can follow up on where we are with each other and I have started looking forward to it.”
Ajax director of football Marc Overmars added: “It’s no surprise that we wanted to extend Frank’s contract.
“That we have come to an agreement after a conversation says it all. It is good for Ajax that Frank remains connected to the club.”
The defender rose through the Ajax youth ranks before making 400 appearances for the first team.
De Boer, who also played for Rangers, Galatasaray and Al-Rayyan, won five Eredivisie titles, two KNVB Cups, the Champions League and UEFA Cup and also a La Liga title with Barcelona.
De Boer won 112 caps for Holland, playing both in the World Cup and European Championships.
Having coached the Ajax youth side he worked as assistant to national coach Bert van Marwijk when they finished runners-up in the 2010 World Cup in South Africa, losing 1-0 to Spain in the final.
De Boer has spent the last two and a half years in charge of Ajax, winning the Eredivisie title three times in a row.