Williams, 25, who has made a name for himself in recent years as a formidable force in Scarlets and Wales' backline, and will remain at the Scarlets until at least 2018.
A self-confessed Scarlets supporter, Williams has developed through the ranks at the region having impressed as a talented 15 year old.
He was named vice-captain ahead of the 2014-15 season and has remained in position, under captain Ken Owens' leadership, for the current 2015-16 season.
A knee injury, suffered in Wales' Rugby World Cup victory over England, means Williams has been forced to watch his side top the Guinness PRO12 table from the sidelines but his signature was a vital one for the region to secure as part of Scarlets' on-going recruitment policy.
Williams forms an exciting part of the region's strong pool of talent at centre, with Jonathan Davies also making a return to West Wales in the Summer.
Since making his debut in 2010, against the Ospreys, Williams has scored 16 tries in 93 appearances for the Scarlets.
Jon Daniels, General Manager at the Scarlets, said: "We are delighted Scott has committed his future to the Scarlets. The interest shown by other clubs is testament to his standing within the European game at the moment.
"However, Scott has consistently stated the environment at Parc y Scarlets is where he wants to be to further his domestic, international and British & Irish Lions ambitions. During the negotiations and the associated media interest he has been a model of responsibility and humility which is further testament to him, his family and his local community."
Commenting on the news Scarlets Head Coach Wayne Pivac said: "Scott is a fantastic guy and is a Scarlet through and through.
"It is disappointing that he's currently out with an injury but securing Scott's signature, and keeping him here at the Scarlets, was important for our continued development over the next few years.
"Having him and Jonathan Davies in the centre next season is going to be very exciting."
Speaking about the news Williams said: "I'm delighted to have signed a contract extension with the Scarlets. I have always been a big supporter of the club and it is exciting to know that I will be able to continue my development here at the region.
"There's a great atmosphere at the Parc and there's a real sense that there are exciting times on the horizon and I'm looking forward to being a part of that on the field once I return from injury.
"Continuing with my rugby development in Wales was vitally important to me to continue with my international aspirations. I'd like to thank the Scarlets board and backroom staff who have been supportive throughout the negotiations."
Williams joins a strong pool of players already signed up for the 2016-17 season at Parc y Scarlets. Captain Ken Owens leads an impressive group of players who have committed their futures to Scarlets Rugby including Jake Ball, John Barclay, Aled Davies, James Davies, Rob Evans, Samson Lee, Aaron Shingler, Liam Williams and Jonathan Davies.
