The dynamic halfback, easily identifiable by his shock of bleach-blond hair, was player of the year in the national provincial championship last year and is tipped by many to be a future All Black.
Some fine performances in Super Rugby Aotearoa this season for the Highlanders, where he alternates with current All Black test halfback Aaron Smith, had alerted other franchises to his potential but Fakatava has elected to stay in Dunedin.
"I have really enjoyed my time here and although there were other options, I really wanted to pay back the club that gave me my start," the Tongan-born 21-year-old said in a statement.
"I have had the best halfback in the world as my coach and I feel very lucky to have had the chance to learn so much down here."
