The Scot joined the Canaries from Hamilton in January with the team in seventh place in the SkyBet Championship and guided them to promotion via the play-offs after losing just three times in 25 matches.
That success has been rewarded with a new deal and Neil admits the club’s punt on him paid off.
“Both parties were taking a chance when I was appointed but it’s worked out very well for all involved and I’m happy this has been sorted before the season gets underway,” said the 34 year old.
“I’ve really enjoyed my five months at the club. Hopefully it is just the beginning as we now look forward to playing in the Barclays Premier League.”
Norwich chief executive David McNally said everyone at the club was delighted with the impact Neil has had since arriving.
“For us this summer it was the most important piece of business to ensure Alex had a much-deserved new contract,” he said.
“He galvanised the football club after arriving in January and we’re certain that Norwich City will continue to progress under his management.
“We’re delighted that the club and Alex will be working together as we continue to prepare for the start of the new Barclays Premier League season.”
Meanwhile, ex-Rangers striker James Beattie has joined Swansea City as a first-team coach.
The former Accrington manager is a former Southampton team-mate of Swansea boss Garry Monk and spent time at the Barclays Premier League club in January observing coaching sessions at the club’s Fairwood training ground.
Beattie, 37, will work alongside Kristian O’Leary and Alan Curtis and will be responsible for coaching the club’s first-team forwards.
“James will come in as a first-team coach alongside Kristian O’Leary and Alan Curtis, but will be given specific responsibility to work on a technical level with our attacking players,” said Monk. “I’ve known James for a long time. He is intelligent, has a great knowledge of the game from his experiences as a player, coach and manager; plus he thinks about the game in the same way as myself.
“He has some bright ideas and, despite already having a fantastic knowledge of the game, he is still looking to learn at every opportunity. I’m constantly trying to create and improve all areas of the first-team environment with young, talented and up-and-coming staff. That’s not just the playing squad, but the backroom staff as well.
“James fits that criteria perfectly and with the experience he’s gained over the years, I’m sure the players will benefit greatly by tapping into his knowledge.”
Beattie won five caps for England after making his senior debut for hometown club Blackburn in 1996 but he made his name during seven years at Southampton where he scored 76 goals in 223 appearances
He completed a £6 million switch to Everton in 2005 and later played for Sheffield United, Stoke, Rangers, Blackpool and Accrington.
Beattie took his first steps into coaching at Accrington before becoming manager in May 2013 and the Lancashire club finished 15th in League Two in his first full season in charge before he left in September 2014.