The agency retained the account after a three-stage pitch involving a number of undisclosed London shops.
Universal McCann's "in-depth understanding" of H&M's business was cited by the company as the reason for not moving the £4 million account elsewhere.
Universal McCann's pitch was led by the agency's joint managing directors, Andy Jones and Damian Blackden.
Jones said: "H&M is a fantastic brand and we are delighted to be reappointed after a vigorous review process. It's further proof of our outstanding retail and brand credentials, and H&M knows we can continue to deliver."
The agency won the business in October 2000 as part of a strategy of global expansion by H&M. The assignment had previously been handled by CIA Conzept.
H&M has been seeking to reposition itself as offering affordable quality fashion, enabling it to compete directly with Marks & Spencer in the UK.
The company reported a 7 per cent increase in turnover for April, compared with the corresponding period last year.