A source close to Diaz said he decided to stay at Texas because he's excited about the program's future. The source went on to say Diaz wants to get the defense back where it was as one of the nation's best.
Under Diaz, the Longhorns struggled defensively this season, allowing at least 30 points six times. Texas closes its season against Oregon State in the Valero Alamo Bowl on December 29.
Diaz has been the Longhorns defensive coordinator the last two seasons after replacing Will Muschamp, who left to become head coach at Florida.