McDermott has extended his contract for a further two years, keeping him with the national side until 2016.
The former Test player - who took 291 wickets in 71 matches between 1984 and 1996 - stepped down as Australia bowling coach after a successful stint in May 2012.
But he returned to the Australia fold in October last year, signing a short-term deal prior to the 5-0 Ashes hammering of England.
They then went and beat the then top-ranked South Africa 2-1 on foreign soil, with the form of bowlers Mitchell Johnson and Ryan Harris significant.
McDermott has been credited for his work with the duo, and the rest of Australia's bowling group, and said he was eager to continue with the team to help maintain their top spot in the rankings for Test and one-day international cricket.
"I feel like we've got a really good group at the moment," McDermott said.
"It's really been great to build this close bond with them all - the boys call it the fast bowling cartel, but we also let (spinner) Nathan Lyon in – and we're all really motivated to keep that going.
"I'm also looking forward to taking on more responsibility and to work closely with (coach) Darren Lehmann to broaden my coaching skills and, alongside (batting coach) Michael Di Venuto, to ensure we're a well-oiled coaching unit.
"While it's a great achievement that we've reached number one in the world in Test and ODI cricket, our goal is to maintain that.
"We've got a huge 12-18 months coming up, which includes hosting India who have some really talented and dangerous batsmen that we'll need to do our homework on, and a World Cup on home soil in front of a home crowd and holding our number one ranking.
"I also know cricket fans will have an eye on the Ashes in England next year and while the players certainly live in the present, coaches are always forward planning so I'll be keeping a bit of an eye on what the English are up to.
"I can't wait to get stuck in to it all."