He joined as youth team coach in 2012 and has been academy boss since 2014.
The 54-year-old has had two spells in charge of the Reds as caretaker manager, in 2014 following the sacking of Billy Davies and last season following Philippe Montanier's exit.
"The academy has produced some outstanding young talent," chairman Nicholas Randall told the club website.
"Securing the continued involvement of Gary will provide much needed continuity and stability.
"A functioning and productive academy is vital to the long term success of any football club."
Nottingham Forest academy manager Gary Brazil has signed a new "long-term" contract with the Championship side.