The 33-year-old made his Ulster debut in 2004 and has scored 16 tries in 172 games for the Kingspan Stadium side.
"I am very happy to remain with Ulster - I'm privileged to captain this talented group of players," said Best, who has won 89 international caps.
"Our challenge now is to deliver on the promise we have shown and reward our fans with strong performances."
Best made his international debut against New Zealand in November 2005 and is Ireland's most-capped hooker.
He started every game of Ireland's successful 2014 and 2015 Six Nations campaigns and played at this year's Rugby World Cup.
"I have worked closely with Rory for a number of years in the national set-up and the quality he delivers so consistently reflects his character and his talent," said Les Kiss, Ulster director of rugby.
"His leadership, tenacity and drive are incredibly important to what we are looking to achieve at Ulster Rugby."
Ireland hooker Rory Best has signed a new two-year IRFU contract which will keep him at Ulster until June 2018.