He returned to Connacht in 2007 and the 6ft 4in, 113kg forward has been ever present in the squad since.
McCarthy was born in London where he attended Sedbergh School before joining Wasps in 2001. He represented England in the 2002 Under-21 World Championship in South Africa under coach Brian Ashton before moving west to Connacht the following year.
He was called into the extended Ireland squad ahead of this year's RBS 6 Nations Championship and got his first cap for the O2 Ireland Wolfhounds against England Saxons last month.
'Macca' earned his 100th cap for Connacht in the Amlin Challenge Cup against Bayonne earlier this season and his new contract will see him stay at the Sportsground until the end of the 2012/13 season.
"I'm really pleased to commit to Connacht, it's been a fantastic season so far and this team is really going places," said the 29-year-old.
"Being part of this squad has helped me to develop as a player and I am looking forward to playing my rugby here for the next two seasons."
Connacht's latest signing Eoghan Grace was a member of the Ireland Under-20 side that captured the Grand Slam in 2007 and also played for Ireland in the 2009 Rugby World Cup Sevens tournament in Dubai.
He was regular with Shannon in the All-Ireland League before being released from his Munster Academy contract, where he was Player of the Year in 2009, to pursue a season's rugby with Exeter Chiefs in the English Premiership.
The 6ft 2in, 100kg Waterford-born forward has been playing openside flanker but can cover any of the back row positions. He will join Connacht at the end of this season on a two-year deal.
"It's a great opportunity to come back to Ireland and progress my career with Connacht Rugby," explained the 23-year-old.
"I've had a great chance in Exeter this season and have learned a lot from coaching staff there, but a move to Connacht is a positive step in my career.
"The chance to play with some of the lads and coaches whom I played with at underage level at Ireland is just great."
Commenting on the signings, Connacht head coach Eric Elwood said: "We're very happy to be keeping Mike onboard. He's been an integral part of the squad for the last number of seasons.
"Gaving a senior player with Mike's professionalism and experience commit to the team is a huge boost.
"We are also very excited about Eoghan joining us next season. He is a mobile, dynamic ball carrier and will make an excellent addition to our squad.
"He was part of the Ireland Under-20 squad in 2007 so we know what he is capable of and look forward to working with him."