The 24-year-old Highlanders first-five eighth has signed on with the franchise until the end of 2018.
Sopoaga has played 49 games for the Highlanders since joining the team in 2011 and was an integral part of the championship-winning team this year.
The Wellington-born player holds the franchise record of most points scored in a season, 191 this year, and could become the Highlanders' leading points-scorer in the next few years.
He has scored 453 points so far, and trails only assistant coach Tony Brown (857). Sopoaga, who is with the Barbarians, preparing to play Argentina in England this weekend, said in a statement he was grateful for the opportunity to play for the Highlanders until at least 2018.
''I owe a lot to the coaching staff and the organisation for sticking by me and allowing me to develop, not only as a player, but as a person. I wouldn't be where I am today without the great team culture, team-mates, coaches and medical staff.
''I'm looking forward to my future at the club,'' he said.
Sopoaga made his All Blacks debut against the Springboks in Johannesburg in July, scoring 12 points and dishing up an offload for Ben Smith to score the team's first try in the win.
He was perhaps unlucky to miss out on a place in the World Cup squad but with Daniel Carter now retired from international rugby and Colin Slade overseas, he is sure to be in the running next year.
His contract extension follows Aaron Smith's decision earlier this year to sign on with the Highlanders through to the end of 2017.
Star fullback Ben Smith is also under contract until then, and the majority of the championship-winning team will be back next season. Highlanders general manager Roger Clark said he was ''delighted'' with Sopoaga's signing, which showed the franchise was an attractive option for players.
''The one thing that they [players] all say is that we have got a great environment here, which has been developed by the coaches,'' Clark said.
''I guess if they are enjoying themselves and they are excelling and getting selected for higher honours, there is no reason for them to be anywhere else.''
Highlanders coach Jamie Joseph was also excited by Sopoaga's decision to stay three more years.
''Lima has worked really hard in the past few seasons to develop his game,'' he said.
''He has grown into a skilful first-five and become an important member of our team. What's more exciting is that I don't think he has achieved his full potential yet and is only going to get better.''
The majority of the Highlanders assemble in Dunedin next Thursday for next year's Super rugby competition.
Fullback Smith is on extended leave after helping the All Blacks win the World Cup, and will not join the team until February.
Sopoaga will join the team a week late after his Barbarians commitments, while the other franchise All Blacks - Malakai Fekitoa, Waisake Naholo and halfback Smith - will join the team after their All Blacks leave.
''That's anywhere from January 11 on,'' Clark said.
''It's definitely case by case depending on how much rugby they have played.''
All Blacks assistant coach Ian Foster and scrum coach Mike Cron have signed with New Zealand Rugby until the end of 2017.
Foster has been an assistant coach alongside head coach Steven Hansen since 2012, and specialises in working with the backs.
Cron was tipped to retire after the recent World Cup campaign but will work with the team's scrum for at least two more years.
Defence coach Wayne Smith is taking a year off full-time coaching.