The Welshman is expected to gain his 28th cap when his national side continue their RBS 6 Nations campaign against France on Friday, was eager to first commit his immediate future to Scarlets.
The Welsh region reportedly had competition from Aviva Premiership clubs Wasps, Leicester and Gloucester for the player's services, while Priestland was also identified for a possible Welsh Rugby Union national contract.
His decision to remain instead at the Parc-y-Scarlets has echoed that of Wales team-mate Scott Williams in signing a new Scarlets deal, while Alun-Wyn Jones, the Wales lock, last month agreed a new contract at the Ospreys. Priestland was also reluctant to leave a club which has helped make him into a dependable player in the international arena.
"The Scarlets is where I've developed as a rugby player and have been supported since I first started playing, with some good coaches and experienced senior players helping me in my career," said the fly-half, who was part of Wales' 2012 Six Nations Grand Slam-winning team.
"It's important to me to continue my commitment to a great rugby community and team. It is good to belong to an environment that means a lot to me."