The exact terms of the new deal were not released by the school on Wednesday night, but it will expire after the 2017 season.
The new contract extension also comes after Collums spent Tuesday and Wednesday interviewing for the open head coaching position at Central Arkansas.
Collums came to ACU in 2005 with Kris Thomsen from Central Arkansas, where Collums had been the offensive coordinator of one of the nation's top offenses. In 2011 Thomsen left ACU to eventually become an assistant at Texas Tech, and Collums was named head coach of the Wildcats.
This past season Collums helped lead the Wildcats to a 6-5 record in their first season as a FCS football program, and now lead them on the field as they being Southland Conference play in 2014.
"Ken and I have been in conversations over the last few days about the future of our program and I made it clear to him he is the coach I want directing our team now and in the future," Mosley said in a release. "Ken's vision and direction for the ACU football program is in line with the mission of the university and the athletics department, and I certainly appreciate everything he's done in that regard.
"He's also been one of the key players in returning our football program to national prominence," Mosley said. "I look forward to watching him lead our team into competition in the Southland Conference in 2014 and beyond."
According to the ACU athletic department Collums reached the new deal with the university on Wednesday afternoon after interviewing with Central Arkansas.
"I certainly appreciate the trust placed in me by (ACU president) Dr. Phil Schubert and Jared Mosley," Collums said in a release. "This has been a long haul to get this program to where it is, but we still have work to do and I'm excited to be the guy leading the way. At the end of the day, my family and I love ACU and this is where we want to be now and in the future."