Mills, 19, is regarded as one of the club's best young players and last month kicked the match-wining penalty in their Aviva Premiership win at Bath.
Coach Bryan Redpath said: "I'm very happy because Ryan is a very talented young player and plenty of teams would love to have him in their squads.
"He's come through very well. Physically, he's been able to hold his own in senior rugby and it's now about him getting more game time and developing his game. He's certainly got an exciting future."
The club did not confirm the length of the deal for Mills, who is now targeting a regular first-team place at Gloucester.
"The challenge for me now is to kick on and try and force my way into the Gloucester team on a regular basis," he said.
"I think my game has come on leaps and bounds, I've had some great people to learn from here at Gloucester, coaches and senior players alike, and I'm really happy to have signed my new contract."
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.
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.