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.
The entire All Blacks apparel line has been updated for 2013/14. Check out the New Zealand All Blacks polo.
The Nike Tiempo is a solid rugby cleat and one of few styles still made from full-grain natural leather.
The Gilbert Blitz 8S rugby cleat is a great cleat at a great price of $69.99. Get a new pair of cleats today.
A cool looking all black rugby cleat with the high performance adidas is known for. Get in the Gear!
Wear the crest of the British and Irish Lions on your t-shirt. A great look for the summer.
$29.99
The All Blacks Performance t-shirt is black with hints of blue from the training jersey. Very Cool.
The New Zealand All Blacks training jersey for 2013/14. Get in the Gear!
The USA Rugby Pro Alternate rugby jersey is perfect for any fan of the Eagles. Get yours to wear during the summer Test matches.
The NEW All Blacks 2013/14 jersey has arrived at World Rugby Shop. Dare to wear the colors of the All Blacks.