The former England coach, who led Lancashire to their first outright County Championship title for 77 years in 2011, is now tied to Old Trafford until the end of 2015.
"I am delighted to extend my contract with Lancashire at such an exciting time for the club," said Moores, who also guided Sussex to their first-ever Championship in 2003 before taking charge of England between 2007-09.
"Not only have facilities at Emirates Old Trafford been developed to match the best in the sport, we have also developed a squad that is very exciting with both emerging youngsters and committed senior players."
Lancashire cricket director Mike Watkinson added: "2013 was a great season not only for the first team but also the Second XI who enjoyed success as we picked up the 2nd XI Trophy and shared the Championship Shield with Middlesex.
"During this period, under the influence of Peter and his coaching team, we have seen the emergence of several home grown players and I am delighted that we have secured his services for a further two seasons."