After a difficult start to the 2014/15 season Solomons has led the team to an improvement in fortunes with victory in the 1872 Cup against Glasgow Warriors and a play-off spot for the European Champions Cup still within reach.
Scottish Rugby Chief Executive Mark Dodson said: "Everyone at Scottish Rugby acknowledges the contribution Alan has made in bringing Edinburgh to a major cup final and improving its league position.
"From the outset we set him the task of rebuilding the club, with Scottish players at its core and to develop young talent. This is now generating the results we hoped for and I am delighted he will continue his progress at Edinburgh Rugby."
Solomons' vision has been to build a sustainable club through young indigenous and Scottish-qualified talent, which he feels can be best developed through playing in a successful team, with a good thread of experience.
Alan Solomons said: "We set ourselves the target, at the start of the season, of being in the top six in the league this year and although this is no longer possible we are still challenging for a play-off spot for the European Champions Cup. Reaching the final of the European Challenge Cup and winning the 1872 Cup have been equally pleasing and that's testament to the hard work of the players as well as the commitment of all our backroom staff.
"The challenges we've faced as a squad this year have been enormous - the injury count in the home game against Lyon being a case in point - but on each occasion we have risen to the challenge.
"I feel we're moving into the next phase of our development as a squad and that's really exciting. We are progressing but there is still a long way to go. I am absolutely focused on continuing this progress and realising the vision."
Players like scrum half Sam Hidalgo-Clyne and flanker Hamish Watson, who had come through the Scotland age grades, and Ben Toolis were enlisted to the Edinburgh Academy and have shone for the club in recent months, progressing to be capped for Scotland during the 2015 RBS 6 Nations.
Solomons continued: "It's been very pleasing to see how players like Sam and Hamish - young Scottish talents - have developed over this season as our overall team performance has improved. I've ensured we have a well-conditioned squad, with the necessary strength in depth, into which young players could come and learn and flourish."
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