The mission's mandate was set to end on Friday but has been extended on an interim basis until an SADC heads of state summit in mid-August, when a more detailed report on the mission's progress will be considered.
Closing Thursday's virtual summit, SADC chairperson and Malawi President Lazarus Chakwera said the extension of the troop deployment prevented the mission from being compromised.
The countries, linked in the Southern African Development Community (SADC), agreed last year to send troops to Mozambique
The insurgency is concentrated in Mozambique's northern province of Cabo Delgado. It has claimed thousands of lives since it broke out in 2017 and disrupted multibillion-dollar natural gas projects.
Mozambique's military had been losing ground to the insurgency until it accepted help from SADC and Rwanda, which has also sent soldiers.
Separately, the European Union's diplomatic mission to Mozambique said the EU would provide the country's army with an additional 45 million euros ($45 million) of financial support.