“After noting the positive impact Joe has made with the Wallabies playing and coaching staff, we were keen that he stay on after the Lions series.
“Joe expressed to us that he was enjoying his work with the Wallabies while also making clear his need to spend more time at home with his family.”
Schmidt has presided over six Test wins and seven defeats since he took over after Jones’s disastrous second stint in charge.
Jones oversaw Australia’s first-ever World Cup exit before the knockout stage in 2023.
The former Ireland coach Schmidt restored some pride with eyecatching wins on the Northern Hemisphere tour over England and Wales in November.
“The British and Irish Lions is our immediate focus,” he said.
“But with the Rugby Championship following so closely after the Lions series, I understand the need for continuity heading into two away Test matches against South Africa.”
Rugby Australia chief executive Phil Waugh thanked Schmidt for extending his commitment to the Wallabies.
“Joe’s drive, knowledge and work ethic have been instrumental in restoring pride in the Wallabies jersey.
“We are pleased that Joe has extended his involvement with the Wallabies beyond his initial contract and look forward to beginning the process of recruiting his successor.”