"The decision has been taken in view of the regional security environment," the Dawn reported, citing the decision made by Prime Minister Khan.
Earlier, there were reports that Prime Minister Khan may give another term to Bajwa as both were working closely.
Bajwa accompanied Khan on his maiden US visit during which he met US President Donald Trump at the White House.
Khan had also nominated Bajwa as a member of the National Development Council, in an unprecedented move.
In Pakistan, the appointment of the Army chief is the prerogative of the Prime Minister and his government.
The practice of the senior most being made the chief is not followed.
Bajwa's extension comes amidst worsening ties between India and Pakistan following India's decision to revoke Jammu and Kashmir's special status under Article 370.
Reacting to India's decision, Pakistan expelled the Indian High Commissioner, after deciding to downgrade diplomatic ties with New Delhi.
Pakistan also suspended its trade relations with India in retaliation against New Delhi's decision.
India has categorically told the international community that its move to scrap Article 370 of the Constitution revoking the special status to Jammu and Kashmir was an internal matter and has also advised Pakistan to accept the reality.
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