The Tipperary native made his Munster debut as a 20-year-old against the Scarlets at Musgrave Park in 2007 and has established himself as a key member of the current squad.
It was against the same Welsh side that he made his first Heineken Cup appearance in December 2011 at Thomond Park.
The back rower's great form last season was rewarded in the summer as he won his first two Ireland caps on the tour of North America, and he was named the 2012/13 Munster Rugby Player of the Year.
O'Donnell has been out of action since September after injuring his knee against Zebre, but head coach Rob Penney revealed last week that O'Donnell is one week ahead of schedule in his recovery and should be back to full training next month.
"I know it hasn't been the best of starts to the season for me with injury, but like last year I just want to come back fighting and push on to the next level again."
Penney added: "Tommy is a great dynamic player and a huge asset to any side, so we are particularly pleased that he has committed to Munster for another two years."
Meanwhile, backs Keith Earls (knee), Ian Keatley (hip/groin) and Luke O'Dea (hamstring) all return to full training with Munster this week.
Lock Ian Nagle (foot) and scrum half Gerry Hurley (finger) both played 80 minutes of rugby over the weekend for their club side Cork Constitution.
Nagle had been out of action since the Zebre game in September, while Hurley was ruled out at the start of October when he dislocated his finger at training.