The extension gives Felton a four-year contract worth $760,000 annually, a raise of $50,000.
The new deal was recommended by Georgia athletic director Damon Evans and approved by the athletic association's executive committee, which includes university President Michael Adams. The committee discussed Felton's contract by teleconference.
"The basketball program has made progress and we look forward to continued improvement," Adams said.
Felton, 58-62 through four years at Georgia, had two years remaining on his contract. The new deal extends his contract through the 2010-11 season.
"I'm appreciative of the confidence shown by the athletic administration and athletic board in the progress we have made and the progress we'll continue to make," Felton said. "I'm excited about the future and continuing to build the program into what we all want it to be."
Georgia finished 19-14 overall and 8-8 in the Southeastern Conference this season. The Bulldogs played in the NIT, winning one game.
It was Georgia's best season since 2003.
WOODEN FINALISTS: Freshmen Greg Oden of Ohio State and Kevin Durant of Texas are among five finalists for the John R. Wooden Award, presented to college basketball's outstanding player.
Others invited for the April 7 presentation at the Los Angeles Athletic Club are North Carolina sophomore Tyler Hansbrough, Texas A&M senior Acie Law, and Wisconsin senior Alando Tucker.
Honored as Wooden All-Americans were UCLA junior Arron Afflalo, Oregon senior Aaron Brooks, Nevada senior Nick Fazekas, Florida junior Joakim Noah and Kansas sophomore Brandon Rush.
ARKANSAS: The chairman of the University of Arkansas board of trustees said the school was waiting to hear from Texas A&M coach Billy Gillispie about the Razorbacks' opening for a head coach.
Stanley Reed said Gillispie is a candidate for the job but said there were others in the running for the post that came open Monday when Athletic Director Frank Broyles fired Stan Heath.
Reed would say only that Gillispie was one of the candidates but indicated that the ball was in the Texas A&M coach's court.