The 26-year-old Waratahs flanker, who has 82 caps for the Wallabies, was approaching the end of his current contract and could have looked to secure a lucrative deal in Europe later this year.
However, Hooper has resisted the temptation to move on and will stay put in the domestic game Down Under with a deal thought to be worth £680,000 per season.
I never really thought about going elsewhere or entertaining anything like that," said Hooper.
"I was really keen to stay in Australia, and keep doing what I can for the Wallabies and the Waratahs.
"I'm not really into contracts and all that back-and-forward, so to know that I'm sorted through to the next World Cup is really comforting."