The 31-year-old hooker is the latest Ireland star to reject a lucrative move to France, after Donnacha Ryan and Conor Murray committed their futures to Munster.
Best made his Ulster debut in November 2004 and has since made 143 appearances, scoring 12 tries.
After making his Ireland debut in 2005 he has racked up 70 caps, scoring his eighth try in Joe Schmidt's side's agonising 24-22 defeat to New Zealand in November.
Best said the warmth and respect of supporters and the Ireland and Ulster set-ups combined to convince him to stay at his home province.
He initially missed out on selection for the British and Irish Lions' summer tour to Australia, but Dylan Hartley's ban for his red card in the Aviva Premiership final led to him being called up as a replacement.
And Best admitted the backing he received after his initial Lions disappointment left a lasting impression.
He said: "I am pleased to have signed for a further two years.
"It is a massive honour to play for Ireland and Ulster.
"The support that I received when I missed out on the initial Lions squad was a massive factor in me making the decision to stay.
"That made me feel very special and underlined to me that Ulster is more than a team, it is a community and a rugby family.
"I want to keep playing for Ireland for as long as I can and to try and win a few more things in the green jersey."
Rugby director David Humphreys said Best will continue to be a pivotal player for Ulster.
He said: "Rory Best is the cornerstone of the Ulster Rugby team and leads by example.
"You would struggle to find anyone who is more committed on the rugby field, nor someone who is more passionate about playing for his province.
"He has represented Ulster for the best part of a decade now and he has achieved some of the highest honours that the game has to offer.
"He will be a key player in our team as we continue to build and improve in the coming years and I am delighted that he has signed this new contract."
- Sports & Recreation