The 48-year-old has led the Super Rugby club to a semi-final and a qualifying final over the past two seasons, and guided them to the top of this year's standings after five rounds.
"I really feel like I'm at home here. We play a brand of rugby that really fits with my thinking on the game," said Laidlaw, who became a New Zealand citizen.
"I'm a couple years in, but I still think there's loads to develop, loads for me to be better at, loads for the team to grow into, and this is the place I want to do that."
Laidlaw, who played more than 90 times for Scotland's Sevens team, previously coached the All Blacks Sevens.
Success runs in the family. His father, Roy, won a Grand Slam with Scotland in 1984, the year after touring New Zealand with the British and Irish Lions.
His cousin, Greig, also a Lions tourist to New Zealand in 2017, played more than 70 Tests in the famous blue Scottish shirt, many as captain.
The Hurricanes meet the Otago Highlanders on Friday.