Gatland, who took over the Adams Park hot-seat from Nigel Melville in November 2001, saw his side emphatically hammer regular season winners Gloucester in the Zurich Premiership Final at Twickenham in May, as well as beating Bath in their European Final.
The 39-year-old Gatland, a midweek All Black as a player who was also coach of Ireland before joining Wasps, said of his new deal: "I'm really happy that Wasps have extended my contract and I would like to thank the club and players for having faith in me.
"We are a small, family orientated club and being a family man, this fits into my life perfectly.
"When discussions initially took place about the extension on my current contract, I spoke to my wife and two kids and it was a family decision that made me agree to stay on for a further three years.
"We've won the English title and a European competition and so the next goal is the Heineken Cup. I'm also looking forward to this season, as it will provide the club and myself with new challenges, especially if we lose key players to the World Cup.
"All I can say is London Wasps are certainly a club and team to be proud of."
Wasps Chairman Chris Wright added: "Warren has had a tremendous impact on London Wasps since he took over as Director of Rugby. The team's record since then speaks for itself.
"Warren is clearly in the top echelons of rugby coaches throughout the world and is clearly much sought-after. I am delighted that we have been able to come to an agreement for Warren to continue with Wasps for a further three years."
Wasps will be without a host of their players for the opening stage of the season, which runs concurrent to the World Cup, with the likes of Lawrence Dallaglio, Josh Lewsey, Joe Worsley, Stuart Abbott, Simon Shaw and Kenny Logan set to be away.
But Wright knows the difficulties that lay ahead, saying: "If we have players away for the World Cup during the first half of the season, 2003/4 will present a tremendous challenge, but we are setting our targets high and will be focusing on making steady progress not just in retaining our championship title but also in the Heineken Cup."
Wasps will, however, welcome a host of new faces to the club for the coming campaign, including Bath wing Tom Voyce, Connacht flanker Johnny O'Connor, Leeds back row Ian Clarke, Bristol scrum-half Peter Richards and Cardiff prop Tim Payne.
By Mark Smith