Hooker Damien Varley, who made his Ireland debut last summer, returned to Munster at the start of last season after a spell with London Wasps.
Commenting on the news, Munster head coach Tony McGahan said: "It is extremely satisfying to see players come up through the Munster system whether is it from the Schools programme for Stephen or the Youth programme for Danny.
"Damien's signing of a new contract reflects his hard work and single-minded approach he has displayed since his return to Munster.
"His form for us has been rewarded with two international caps and we feel his continued progress will play a significant role in both Munster and Ireland's rugby programmes."
Since returning to his native province, Garryowen clubman Varley has won 44 caps, and this term has played in 21 of Munster's 24 games to date.