The New Zealand international fly-half had been a subject of intense speculation linking him with a move overseas.
But Quins announced on Thursday that the 32-year-old has agreed terms that will keep him at the Twickenham Stoop until 2016.
Evans, regarded as one of the most successful foreign signings made by any Premiership club, joined Quins from Otago four years ago.
He has now scored almost 1,200 points for Quins and was named the Rugby Players' Association player of the season last term.
"There is not a player, supporter or coach in the game in England, let alone Harlequins, who will not be delighted that Nick Evans has agreed to stay with us for another three years," Quins rugby director Conor O'Shea said.
"The Aviva Premiership wants the best players playing in it, and Nick is one of the very best.
"He contributes so much to this club both on and off the field, and he is the perfect role model for all young players.
"While I know one of the main reasons he is staying with us revolves around his family, ultimately it is about his ambition to achieve things with this club.
"We have started something here and Nick wants to see it through. His decision to stay is a great early Christmas present for all Harlequins supporters."
Evans added: "Myself and my family are happy to have the opportunity to stay at Harlequins. I'm looking forward to continuing to play with a great bunch of lads and to working with a special coaching staff.
"There is no limit to what this team can achieve, and I am excited to have an influence both on and off the field.
"My decision was made easy by the ambition of this great club, the success we have had and the hunger to want more.
"The support I have had from the supporters has been amazing, and I will do my best to help the club stay one of the major forces in English and European rugby."
Quins are currently top of the Premiership, while they launched their Heineken Cup campaign last month with successive victories over Biarritz and Connacht.
Evans went off injured during the Biarritz game almost three weeks ago, but it is thought a return to playing action is imminent.
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