Al-Badri, who used to be an assistant to Manuel Jose, took over at Ahli last summer following the resignation of the Portuguese coach but looked on the verge of losing his job few weeks ago.
He was heavily criticized after the Red Devils lost 2-0 at Libya's Ittihad in the first leg of the African Champions League round of 16.
However, with Ahli beating Ittihad 3-0 at home to qualify for the competition's group stage as well as wrapping up a sixth consecutive Egyptian Premier League title, Al-Badri quelled doubts surrounding his future.
"The club's football committee would like to announce that Al-Badri has penned a one-year contract extension," Ahli said in a statement on their official website.
"The club appreciates the work he has done since his arrival. He successfully accomplished his tasks, winning the league title and guiding Ahli to a place in the Champions League group stage.
"He also promoted several youngsters and was very dedicated to his work and loyal to the club."
Ahli's season was disrupted by injuries to some key players, including playmaker Mohamed Abou-Treika and striker Emad Meteb.
Al-Badri relied on several youngsters who repaid his faith with a string of fine displays.
Winger Ahmed Shokri and central midfielder Shehab Ahmed became key members of Ahli's starting line-up under Al-Badri and admirably gelled into the team.
Shehab scored a superb stoppage-time goal to help Ahli overcome Libya's Ittihad at Cairo stadium and avoid an embarrassing Champions League elimination from the preliminary rounds.
Al-Badri lived in the shadow of Jose, who steered Ahli to a host of local and continental titles during his glorious reign, for the majority of the season but he still has a chance to stamp his own mark.
Ahli can complete the double if they win the Egyptian Cup, which will begin later this month.
The Cairo giants, who open their campaign against lower division side Nabaroh, are expected to meet arch-rivals Zamalek in the second round.