Ioane had been reportedly offered a __?__million-a-year by the Kubota Spears.
However the 26-year-old, who helped Australia finished third at the World Cup and played a key role as the Reds won the Super Rugby title, has opted to remain in Queensland.
Ioane follows James Horwill, Ben Daley, Quade Cooper and James Slipper in committing to Australia and the Reds.
Coach Ewen McKenzie told the official Reds site: "We've been quietly confident Digby would remain in Queensland.
"He's one of our most popular figures and he has the ability to change games with his enigmatic style of play.
"Digby is a guy who gets a lot of touches every game. He always has the ball in his hands and he has a ridiculous number of game involvements. He gives us a real point of difference."
Ioane is currently in his second spell at the Reds, having began his career at the franchise before moving to the Western Force in 2006.
The powerhouse winger returned to Queensland in 2008 and has gone on to make 45 appearances for the side, scoring 16 tries.
Gilbert has released a new line of rugby cleats. The Gilbert Virtuo 8S is part of the exciting new product. Check it out.
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The New Zealand All Blacks training jersey for 2013/14. Get in the Gear!
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