Lillis's new deal ties him to the Shrimps until the end of the 2009-10 season.
It follows McIlroy agreeing his long-term future with the League Two side earlier this month.
"I have had a great time here at Morecambe and I want to help Sammy take the club even further," Lillis told the club's official website.
"We want to establish ourselves in the league and then begin to look to challenge for a place in League One.
"Sammy and I have great ambitions for the club and we will work hard to bring more success.''
Lillis, whose son Josh is United's backup goalkeeper, has been assistant to McIlroy at Christie Park since May 2006. The pair had previously worked together at Stockport County and with the Northern Ireland national team.
He was assistant manager at Glanford Park between 1996 and 1999, when he left to manage Halifax Town. He played for the Iron between 1989 and 191.