The decision was unanimously approved Thursday by the NBA Board of Governors.
The 70-year-old Stern watched over the NBA through its early struggles to its rise as one of the most popular sports in the country and the world. He started working for the NBA in 1966 as outside counsel.
“You'll be remembered as the best of all-time,” Silver told Stern, sitting to his left on a podium during a news conference.
Stern said he decided on his plans about six months ago, having guided the league through a lockout that ended nearly a year ago. He said the league is in great shape and he is confident in Silver, who has been the league's No. 2 since 2006.
“I don't know what else to say other than to recite what I told the owners yesterday in executive session,” Stern said. “I told them that it's been a great run, it will continue for another 15 months, that the league is in, I think, terrific condition.”
The Associated Press contributed to this report.