Since joining Connacht in 2008, Keatley had made the number 10 jersey his own. He has scored nearly 400 Magners League points for the westerners, and his Amlin Challenge Cup haul stands at 202.
A Grand Slam winner with the Ireland Under-20s and a former member of the Leinster Academy squad, the 23-year-old has played twice for Ireland at senior level. He has also featured for the Ireland 'A' and Sevens teams.
Meanwhile, Keatley's future team-mates will include a talented crop of youngsters who have extended their contracts with Munster.
They are forwards Darragh Hurley, Mike Sherry, Ian Nagle, Dave Foley, Peter O'Mahony, Paddy Butler and Tommy O'Donnell, along with backs Conor Murray, Scott Deasy and Felix Jones.
Nagle, Foley, O'Mahony, Butler and Deasy were on Development contracts, while hooker Sherry and scrum half Murray come straight from the Academy to be fully-contracted.
In another boost for the province, Doug Howlett has agreed a further contract extension that will keep him in Ireland until the end of the 2011/12 season at least.
The winger, who remains New Zealand's record try scorer, is staying at Munster despite more lucrative offers from abroad.
Howlett, 32, scored three tries in six Heineken Cup appearances for Tony McGahan's side this season.