The English flanker, who arrived at the Stade Mayol in 2011, will remain across the Channel until 2017.
"I've been here three years now, and good things have happened," Armitage, 28, told Toulon's official website.
"We've won the European Cup, we've reached two quarter-finals in two years. I hope that we continue and win the Top 14 this time."
Armitage was cleared of doping charges one year ago after testing positive for a banned substance.