The news came after AC Milan beat Sassuolo in a 2-1 victory. There had been speculation in the last few months that German coach Ralf Rangnick might make the move to Italy.
But his representatives said in a statement that negotiations had come to an end, and both parties had decided it was not the right time to take on any role at AC Milan.
Pioli had previously faced criticism, but the team has stepped up their game since Italian football returned from a coronavirus-induced halt and so far remain undefeated.
The contract extension means Pioli is signed on as coach until June 2022.
