The rock solid fullback is now 28 and with the new deal taking him to the end of the 2016 season, will remain a one-club player.
The early decision means he will avoid any free agency distractions.
"Being a Queensland boy, growing up on the Gold Coast, I've got a real passion for the jumper and a real passion for Queensland. To be able to be a Lion for life is a dream come true," Merrett said.
"It means a lot to me. It means a lot to have my name on the locker and to be a Queenslander and play for a Queensland club.
"The club has a proud history as well, we had the Hall of Fame last year and it gives you a little tickle in the heart to see how proud the club is."
Merrett has played 135 games for the Lions since making his debut in 2005.
After spending most of his time in 2012 in the forward line to support Jonathan Brown, Merrett will revert to his customary backline position this season.
Despite not being named in the new Lions leadership structure earlier this week, he said he would still play a big role in mentoring young players.
"We're on the way up and I've got faith in the group coming through," he said.
"I'm on board and I'm going to help this team get back to finals.
"I'm here to bring the next crop through … to the level where we're fighting for spots and it's very competitive who's getting a game week in and week out."
Lions' football operations manage Dean Warren said: "Daniel’s commitment to the club's direction is unquestionable.
"He was eligible for free agency this year but wanted to complete contract negotiations prior to the start of the season to ensure that it didn’t become a distraction which speaks volumes for his character."
Merrett will line up at Metricon Stadium on Saturday night when the Lions open their NAB Cup campaign against Hawthorn and Gold Coast.
Daniel Merrett is a defender/forward in NAB AFL Fantasy. He averaged 68 points in 2012. Register your team at our AFL Fantasy Hub.
Michael Whiting covers Brisbane Lions news for AFL.com.au. Follow him on Twitter: @AFL_mikewhiting
