Taarabt had been linked with a move to French club Paris St Germain last season and speculation about his future has continued during the close-season.
But the 23-year-old, who joined QPR from Tottenham in August 2010, has been persuaded to pledge his future to Mark Hughes's side.
"When I first arrived here I honestly thought it would be just for a short period but I love this club and the people here have really helped me and I am very happy to be here," Taarabt said.
"I had a tough start to the season last year, but I worked hard and I have really enjoyed it under Mark Hughes.
"The club is getting bigger and bigger, with a new training ground and talk of a new stadium is very exciting. In the time I have been here, QPR's ambition has changed.
"Last year the aim was to stay in the Premier League. We achieved this and now we want to progress and improve."
As well as signing a new deal, Taarabt has been handed the number 10 jersey at QPR -- worn previously by club legends like Stan Bowles and Rodney Marsh.
"This means a lot to me personally," he said. I know '10' is very important at QPR. Special players like Bowles and Marsh have worn this.
"The club told me that the fans want me to have this shirt."
Taarabt has made 123 appearances for QPR in all competitions, scoring 29 goals, and helping the club establish themselves in the Premier League after winning promotion in 2011.
smg/pi
Courtesy of ScoreMobile (http://m.thescore.com/scoremobile)
Sent by Maxis from my BlackBerry® smartphone
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