The New Zealand born 27 year-old joined Connacht at the beginning of the 2009/10 season and has clocked up 63 appearances for the province.
Nikora, now qualified to represent Ireland through residency, previously played for New Zealand at Under 21, Under 19 and Schools levels.
Chief Executive Tom Sears said: 'Miah is a key member of the Connacht squad and we are very pleased he will be staying with us. Every squad needs two quality players at outside half and Miah has proven time and time again that when he gets the opportunity he is more than capable of stepping up. He showed that admirably last week in the win over Cardiff Blues.
'He has an outstanding attitude and work ethic and sets a great example to other players. With both Miah and Dan Parks in our squad we have two excellent goal kicking tens who push each other constantly and provide crucial depth in a key position.'
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