Stotts drew widespread praise this past campaign for leading the Blazers to the second round of the playoffs despite losing four starters in the off-season.
Portland lost to Golden State 4-1 in a hard-fought best-of-seven series.
Stotts finished second in Coach of the Year voting behind the Warriors' Steve Kerr, but many, including LeBron James, said he was deserving of the award.
Stotts, 58, has coached the Blazers for the past four years and guided them to three straight post-seasons.
He has a 182-146 record with Portland.
