It is a surprising turn of events at the City Ground given Forest were reportedly set to sack Cooper after Monday's 4-0 defeat at Leicester City made it five losses on the spin and left them bottom of the table.
Cooper led Nottingham to Premier League promotion last season for the first time since 1999 and the club signed 23 new players in the summer transfer window at a cost in excess of £140m.
A statement from the club announcing Cooper's new deal on Friday read: "It is now important that our focus is solely on football.
"As a group we are all concentrated and will do everything we can to help the team move up the league table and once again demonstrate our qualities that led us to the Premier League."
"Everyone who knows me knows how much I have loved and am loving my time at Nottingham Forest, and knows how important it is to me," Cooper said at his press conference on Friday ahead of Monday's game against Aston Villa.
"I'm not much of a media follower, so I've not been as informed about what's been said [this week] as anyone else, but internally there's only been normal conversations after Monday's game.
"We were obviously disappointed with the result and performance, but the conversations with ownership and the CEO have just been about that - but that's like it is after every game. My mindset is on my job, being the head coach of the club."
