World Snooker chairman Barry Hearn made the announcement during the Masters final between Shaun Murphy and Neil Robertson.
Hearn told BBC Sport: “It is really good news and we love the uniqueness of Sheffield.
“We have always said that while we have the support of Sheffield and the BBC, nothing changes. We have reached an agreement with the council to stay there until 2017.”
The tournament moved to the South Yorkshire venue in 1977, when it was won for the third time by John Spencer.
Stephen Hendry leads the way with seven Crucible wins, with six for Steve Davis and five for last year’s runner-up Ronnie O’Sullivan. The sixth and last of Ray Reardon’s wins also came in Sheffield in 1978.