Capped 116 times to date, the 30-year-old Aucklander has accumulated 375 points for the province in all competitions.
In 2011 Nacewa was named both the Irish Rugby Union Players' Association (IRUPA) and the Leinster Rugby Bank of Ireland Player of the Year, as well as being chosen as full-back on the PRO12 Dream Team for 2011 and he was shortlised for the ERC European Player of the Year.
Leinster expect to announce news of a new signing in the coming weeks.
Commenting on the news, Leinster head coach Joe Schmidt said: "I've known Isa for a number of years. He's universally respected due to the quality of his character, his athleticism, skill and commitment.
"He has been great value for us, not just on the field where he has provided a string of highlights but off the field also, where he has contributed enormously to the development of the players around him.
"He's hugely popular amongst supporters and hopefully they will enjoy a few more outstanding performances from Isa in the coming weeks."