The 54-year-old, previously on a rolling one-year contract, has enjoyed unprecedented success since taking charge at the KC Stadium in 2012.
Promotion followed within a year of his appointment and last season saw the club enjoy a first ever FA Cup final appearance.
Bruce has been in discussion with the Yorkshire club for several weeks over the new deal, which will run until the end of the 2017-18 season.
He is expected to sign the contract within the next 24 hours to give City a major fillip ahead of Saturday’s relegation showdown with bottom club Leicester City.
Bruce said: “I’m delighted to have committed my future to the club – we have achieved a lot in the few years we have been here but this is just the beginning of the journey.
“Premier League survival is now crucial for us at this time, as is improving our training facility as we look to continue to grow and become a solid, well-run Premier League club.
“I would like to thank the owners for their continued support as well as the fans; we have had the supporters backing since we arrived here in Hull and long may that continue.”
The news would suggest that not only do the board have faith in Bruce to keep the club up but, if the worst did happen and the Tigers were relegated, he will remain in charge.