The 27-year-old suffered an ankle injury playing against Edinburgh in the RaboDirect PRO12 last November and has not played since.
Following consultation with medical experts in Belfast, Dublin and London, Ferris underwent a third ankle operation in May. He is expected to miss at least the first four months of the new season.
The flanker has played 102 times for Ulster and has been capped 35 times by Ireland. He toured South Africa with the British & Irish Lions in 2009.
Commenting on the contract extension, Ulster's director of rugby David Humphreys said: "Stephen has had a difficult year with the injuries that he has suffered, but when he is fit there is no doubt that he is one of the best back row forwards in the game.
"Stephen is passionate about playing for Ulster and Ireland and our aim in giving him this contract extension is to provide him with the best possible care to enable him to get back playing."
Speaking about his new deal with Ulster, Ferris said: "I am delighted that I can continue my recovery and rehab from injury within the Ulster Rugby set-up.
"I believe that working with the medical team at Ulster, along with the excellent strength and conditioning coaches, offers me the best chance of regaining full fitness and of representing Ulster and Ireland again."