"Over the years I have been privileged to play in many fantastic Munster sides and as we build for the future, I am excited by the prospect of playing my part in achieving success with Munster and Ireland in the coming seasons."
Paul made his senior debut for Munster against Edinburgh in August 2001 and has since made 154 appearances for Munster, scoring 19 tries. He made his Ireland debut in the 54-10 Six Nations win over Wales in February 2002.
The 34-year-old lock has won 88 caps for Ireland and was named as captain of the national team during the 2013 GUINNESS Series. His last appearance for Ireland was in the 22-20 loss to New Zealand in November.
O'Connell has toured three times with the British & Irish Lions (2005, 2009 and 2013), captaining the tourists on the 2009 tour of South Africa and playing in the first two Tests of the successful 2013 tour of Australia.
He captained Munster to Heineken Cup success in 2008 and to two league titles (2009 and 2011).
"We are delighted that the Irish captain has committed his future to Munster and Ireland for the next two years."
Munster head coach Rob Penney said: "We are delighted that Paul has signed a new IRFU contract which keeps him at Munster up to the end of the 2016 season.
"Paul has contributed so much to Munster Rugby over the years and remains one of the best second rows in world rugby. His experience and leadership will play a key role in the future development of this young Munster squad."
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