Gatland will take charge for next year's Six Nations and Rugby World Cup, and potentially the 2027 tournament.
The decision follows a Welsh Rugby Union review into a dismal autumn campaign, which included a first loss to Georgia.
Former Scarlets coach Pivac took over from fellow New Zealander Gatland after the 2019 Rugby World Cup.
But during the 60-year-old's final year in charge, Wales only won three out of 12 games.
