Jocketty, 60, came to the Reds as a special adviser in January, 2008 and assumed the role of GM and president of baseball operations after Wayne Krivsky was dismissed early that season.
"Obviously, I am excited about it," Jocketty said of the new deal. "We've made a lot of progress in this organization but we still have a long way to go. It was good to sit down with Mr. Castellini and work this out and do three years. I want to continue to grow this organization to the point where we will be perennial contenders."
The Reds have a 319-323 record since Jocketty joined the organization, and the club won the National League Central division title last season with 91 victories. It was the franchise's first postseason berth since 1995. Last winter, the Sporting News named Jocketty as baseball's executive of the year.
Already eliminated from postseason play and not a factor in the race much of the season, Cincinnati did not fare as well in 2011 and carried a 76-80 record into Friday's series opener vs. the Pirates.
That was one of the reasons Jocketty wanted to return to the Reds. He never considered exploring opportunities to go to another club. There had been media speculation last week that the Cubs could be a destination.
"I came here for a reason -- my relationship with Mr. Castellini and the Williams family -- and we came with a goal to build this organization into a winner," Jocketty said. "We're not quite there yet. I felt there was still a lot of unfinished business to take care of and I really didn't want to go anywhere else. I'm happy."
This is Jocketty's 37th season in professional baseball and his 17th as a GM. He held that post for 13 seasons with the Cardinals from 1995-2007 and won two pennants and one World Series.
"I think it's great for the city, great for Walt and great for the organization," said Reds manager Dusty Baker, who is signed through 2012. "He's a quality man. I've known for him for a long time and he's been the same."
The Reds have several questions that should keep Jocketty busy through the winter. They have to pick up the options on second baseman Brandon Phillips and closer Francisco Cordero, and decide whether to tender extensions. There are seven players eligible for arbitration, including starting pitchers Edinson Volquez and Homer Bailey. There could be holes to fill in spots like left field, and possibly a top-tier starting pitcher.
Jocketty, who said he expected stability to flow downward within his front office, felt like his vision for the Reds matched that of his boss, Castellini.
"You know how he is, he wants to win," Jocketty said. "I think he sees the progress we've made, and felt good about it and wants to keep the continuity.
"It's a good organization. We're at the point where we're at the point of being a good organization for a long time. As I told Mr. Castellini, I want to make sure we build this thing into a first class organization where people want to come here to work and come here to play. We're not that far away. There is a lot for our fans to be excited about. We have a lot of quality young players. We're going to have to work some this winter to figure out what we need to do to get better next year."