After guiding Hodoud to the Egyptian Cup final, Al-Ashri backed down on his initial decision to leave the Alexandrian outfit.
"I met with the board and finally decided to extend my contract and stay on for next season," the former Egypt international told FilGoal.com.
"I've been promised enough funds to make new signings, while keeping the important players of the team."
Al-Ashri, who was on brink of joining Arab Contractors, handed in his resignation midway through the league campaign, but was persuaded to stay on.
The 42-year-old managed to overcome Hodoud's poor start to the season, finishing sixth of the league table after an impressive run of results.
He also led the military side to the Egyptian Cup final for the second year running as they prepare to face league champions Ahli on Monday.