The 29-year-old had been heavily linked with a move to European champions Toulon.
Pienaar, who joined Ulster in 2010, has now committed his future to the Irish club until summer 2017.
"I am delighted to be staying at Ulster," he told the team's official website. "I have really enjoyed my first three seasons at the Province and I am looking forward to helping the team compete for silverware in the coming years."
Pienaar has won 71 caps for South Africa following his debut in 2006.