Redfearn, who took over from Carla Ward last August, took the Blades to fourth spot in the FA Women's Championship this season.
Back in the autumn, the former Leeds United head coach, was named as the LMA Manager of the Month in the FA Women’s Championship for September after two wins and a draw in his first month in charge.
Redfearn's backroom staff will also remain in place next season. Current first team staff member Luke Turner will become Redfearn's assistant coach next season, while Josh Dowsett remains in place as goalkeeper coach.
Blades chief executive officer Stephen Bettis: "After a competitive finish in his first season in charge, we are delighted that Neil has committed for two more years, the aim being to continue to progress."
The 55-year-old's role at the Blades is his third appointment in women's football, having previously managed Doncaster Rovers Belles and Liverpool Ladies, with the latter being a brief spell in the summer of 2018.
During his time with Doncaster, the Belles won the FA WSL 2 title in May 2018, their first trophy since 1994.
Redfearn, a legend in his playing days at Barnsley with Doncaster Rovers and Bradford City also among his other clubs, latterly worked as under-23 coach at Newcastle United before linking up with Sheffield United Women.
Previously, he enjoyed a successful spell at Leeds academy, having to bring through the likes of Sam Byram, Lewis Cook, Alex Mowatt and Kalvin Phillips and was head coach for most of the 2014-15 season.
He has also previously served as caretaker boss for three brief separate spells.