Educated in Blackrock College, the Dublin born out-half made his Leinster senior debut against the Newport Gwent Dragons in May 2009 and has made 81 appearances to date for the province, scoring 337 points in the process.
Commenting on the news, Leinster head coach Matt O'Connor said: "We are delighted that Ian has extended his stay with Leinster.
"He displayed a real level of consistency in his performances last year, which was recognised by his peers in being voted the Bank of Ireland Players' Player of the Year as well as picking up the Golden Boot award as the top kicker in the PRO12.
"We are confident that his best years are ahead of him and he can achieve even greater things in the years to come."
IAN MADIGAN -
Date Of Birth: March 21, 1989
Height: 1.80 m (5ft 11in)
Weight: 90 kg (14st 2lb)
Club: Blackrock College RFC
School: Blackrock College
Leinster Caps: 81 (18 tries, 55 penalties, 38 conversions, 2 drop goals)
Leinster 'A' Caps: 6 (v Saracens, Bristol, Ospreys, Ulster x2, Connacht)
British & Irish Cup Caps: 7 (v Exeter Chiefs, Newport x2, Gael Force, Cornish Pirates, Currie, Bedford Blues)
Ireland Caps: 4
Ireland 'A' (Wolfhounds) Caps: 2 (v England Saxons x2)
Ireland Under-20 Caps: 14 (v Wales x3, England x2, New Zealand x2, Italy x2, Scotland x2, France, Argentina, Samoa)
Leinster Under-20 Caps: 6 (v English Counties x2, Ulster x2, Munster, Connacht)
Leinster Under-19 Caps: 2 (Munster, Connacht)
Ireland Schools Caps: 4 (v Japan, Italy, France, England)
Leinster Under-18 (Schools) Caps: 4 (v RFU Academy, Connacht, Ulster, Munster)