His first season with Ulster was cut short after just three matches when he snapped his Achilles tendon, but he has been outstanding for the province in the current campaign, scoring eight tries and adding considerable attacking flair to Ulster's back-line.
Commenting on Payne's new contract, Ulster director of rugby David Humphreys said: "Jared is an exceptional player who is as dynamic with ball in hand as he is rock solid in defence.
"He is a hugely important member of our squad and I am delighted that he has committed to Ulster for a further three years."
Speaking about extending his stay at Ravenhill, Payne admitted: "I am really enjoying my rugby here at Ulster so I am pleased to be staying for another three years.
"We have a fantastic squad of players and we play a great brand of rugby. It has been a successful season so far and hopefully we can finish the campaign off with some silverware."