Following his younger brother David's decision to agree a professional contract until 2009, 26-year-old Mike has agreed to stay with his hometown club.
The Edinburgh-born half-back has already recorded over 60 Magners League appearances and over 30 Heineken Cup outings for the club while also featuring in two World Cups for Scotland.
And Blair admits he is delighted to have extended his contract with Edinburgh and revealed the ambitious nature shown by the club matches his own.
Blair said: "I am naturally pleased to have signed a new deal with Edinburgh. I have lived in the city my whole life, although this decision was not about settling in a comfort zone.
"The appointment of Andy Robinson as Edinburgh's head coach underlines the ambitious nature of the club and we have already made visible progress so far this season.
"When the opportunity came along to extend the contract, I talked it over with Andy and his vision of where he wants to take the club helped me to make up my mind.
"Edinburgh is a club that will continue to grow and, as a part of a young team with so much potential, I am excited about playing my part in that development.
"It is my club and I have been incredibly proud to both play for and captain the side over the last six years."
Andy Robinson says Blair has really impressed him since him since he was appointed Edinburgh's head coach in October and the player's decision to extend his stay is a sign that the club is heading in the right direction.
Robinson said: "Mike is a very talented rugby player, who has also shown tremendous leadership qualities when he was asked to captain the side recently.
"Any coach wants to work with the best players, so obviously I am pleased Mike has decided to sign until 2010 and I look forward to helping him improve as a part of the Edinburgh team."
Edinburgh chief executive Nic Cartwright welcomed the news and acknowledged Blair's contract extension was a major coup for the club.
Cartwright said: "Mike is a top-class rugby player and sums up what Edinburgh Rugby Club is all about; flair and determination.
"Therefore I am extremely pleased that he has decided to extend his stay with us until 2010 and I'm sure he will have a significant role to play in the objectives we hope to achieve over the next three years.
"Despite being only 26, Mike has already achieved a huge amount, but he has still got the hunger and desire to help Edinburgh to challenge for trophies."
Scottish Rugby chief executive Gordon McKie echoed Cartwright's views and suggested Blair's decision to stay will be the start of a trend where Scotland's best players will remain in the country.
McKie said: "As Scottish Rugby has outlined in the strategic plan, we are aiming to provide the majority of the Scotland team from both Edinburgh and Glasgow by 2012.
"Mike's decision to remain at Edinburgh signifies how healthy the Scottish game is, but we know there is always room for improvement.
"Mike will be a very important player for both Edinburgh and Scotland over the next three years and we are happy he has extended his contract."
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