Interim Director of Athletics Christine Susemihl announced the new contract, which is effective immediately and runs through the 2008 season.
"This is a continued commitment to Dale Layer, members of his coaching staff, and the student-athletes in our program now and in the future," said Susemihl. "This is also a reflection of the success that we've enjoyed and the progress on a national level that we expect to continue.
"Dale Layer is building a solid program, not just a good team. We are confident that the success enjoyed by the Rams in 2003 is a preview of the expectations for the future.
"He and members of his staff have mplemented a foundation that is based on character. The student-athletes in our program now and in the future will proudly represent the institution on the court and in the classroom."
Susemihl said the new five-year contract raises Layer's base salary to $185,000 with another $40,000 guaranteed for media and public relations.
The new contract provides financial incentives for Layer and his staff when the Rams reach NCAA or NIT postseason competition.
Layer just concluded his third season that climaxed with a league title and game with Duke in the West Region First Round, Colorado State's first trip to the NCAA Tournament since 1990.
"I'm thankful for the opportunity to continue building the basketball program at Colorado State. The university and athletic administration have shown great commitment to our program," said Layer.
"I'm also very appreciative for the long-term commitment that the university has shown to me and the rest of the coaching staff. The contract brings security to the members of my staff, and allows potential student-athletes to confidently commit to the future of our program.
"Our success has come through the efforts of many people. I believe we have the best assistant coaches in the conference. The student-athletes in our program have continued to work extremely hard to earn the success that we have had."
Layer has a 46-45 record in his three seasons and joins Boyd Grant as the only two coaches in school history to take a respective Colorado State squad to the NCAA Tournament in three or fewer seasons.
Colorado State returns eight letterwinners including three starters from last year's squad. Leading the list of returning players is seven-foot, 255-pound junior center Matt Nelson, the Most Valuable Player in the MWC Tournament and a participant in the USA Basketball Pan American Games team trials earlier this month.
The Rams also boast back-to-back top-30 recruiting classes. A season ago, freshmen Micheal Morris and Shelton Johnson played prominent roles in the team's success as starters and top reserves.
Four incoming freshmen figure to play significant roles in the program now and in the future.