24-year-old Sopoaga has played 49 games for the Highlanders and made his All Blacks Test debut this year against the Springboks in South Africa.
He holds the season record for points scored by a Highlander with 191 in 2015.
He is the second-ranked Highlander for most career points on 453 (behind current assistant coach Tony Brown).
Sopoaga said: "I'm so grateful for the opportunity to sign to the Highlanders until 2018. I owe a lot to the coaching staff and the organisation for sticking by me and allowing me to develop not only as a player but as a person. I wouldn't be where I am today without the great team culture, teammates, coaches and medical staff. I'm looking forward to my future with the club."
Sopoaga joins teammate Aaron Smith, who also announced a lengthy contract extension earlier this year, their commitment to the team augurs well for the future prospects of Highlanders' rugby. Both Sopoaga and Smith have been nominated for the Super Rugby Player of the Year at the 2015 New Zealand Rugby Awards being held in December.
Highlanders' Head Coach Jamie Joseph said: "Lima has worked really hard in the past few seasons to develop his game, he has grown into a skilful first five and become an important member of our team. What's more exciting is that I don't think he has achieved his full potential yet and is only going to get better."
Sopoaga and Highlanders teammate, Waisake Naholo, are currently in England with the Barbarians preparing to take on Argentina this weekend.