English club Bath were chasing his signature but the Ireland 'A' lock has decided to stay in Galway and put pen to paper on a one-year contract extension.
The 27-year-old, who has enjoyed a three-year spell as Connacht's captain, signed his current two-year deal with the westerners in March 2006 and has been one of the side's most consistent performers in recent campaigns.
Farley has played 125 times to date for Connacht since his move west in 2003. Prior to that, he had been playing for Swansea in Wales.
His initial grounding in rugby was in his native Brisbane and he went on to be capped at Under-19 and Under-21 levels by both the Queensland Reds and Australia.
After stints playing for L'Aquila in Italy and Otago in New Zealand, the imposing lock linked up with the full Queensland Reds squad in 2002 before being spotted by then Swansea coach John Connolly.
One of Farley's main goals over the next year will be to see Connacht gain Heineken Cup qualification and he could also become Connacht's most-capped player, surpassing the province's assistant coach and former out-half Eric Elwood who holds the record with 161 caps.
Farley, who became Irish-qualified in 2006, said of the contract announcement: "I've had five very enjoyable years here, three of which have been as captain and I'm delighted to be extending my contract by another season.
"As Connacht grows, I feel that I am growing alongside it and hopefully with more upcoming signings, the team will be able to reach its real potential and I hope to be there every step of the way."