McLaughlin, who has been in charge at Solitude for the past two-and-a-half years, had been heavily linked with the vacant assistant manager's role at Derry City.
But the 41-year-old has decided to extend his spell in north Belfast following talks with Chairman Gerard Lawlor.
Lawlor is pleased to see McLaughlin stay on at Solitude and praises his hard work and commitment to the club
“We are very pleased to have agreed a new deal with Paddy and look forward to building on the hard work he has done in the last two-and-a-half years," he told the club website.
“The season just finished was a very challenging one on and off the park but one thing that never relented was Paddy’s determination and desire to improve Cliftonville every day of every week and I have no doubt he will continue to work as hard as he has ever done as we build towards next season.”