He made his Ireland debut in the 17-3 win over Argentina in November 2008. The 30-year-old has won 28 caps for Ireland. His last appearance for Ireland was in the final game of last season's RBS 6 Nations against Italy.
IRFU Chief Executive Philip Browne said: "Donnacha has proven his worth to Irish rugby with his intelligent and high intensity performances for both Munster and Ireland. The IRFU are delighted to secure his future in Ireland for the next three years."
Munster head coach Rob Penney added: "We are delighted that Donnacha has signed a new IRFU contract which will ensure that he remains a Munster player until the end of the 2017 season.
"Donnacha's quality and versatility will continue to be major asset for the squad as well as the key leadership role he plays both on and off the field."
Commenting on the new IRFU-funded contract, Donnacha Ryan said: "I am delighted to sign a new IRFU contract and to continue my playing career with Munster. It is an exciting time to be involved in Irish rugby and I hope to play an important role in achieving success for both Munster and Ireland."