The number eight has been among the Brumbies' best players so far this year, scoring two tries in the past two matches of the Super 14 season.
"There is so much more I want to achieve here in Australia, both provincially and at the international level," the 26-year-old said after putting pen to paper on Wednesday.
"I want to start as many Tests as I can this year. I want to play as much as possible. I feel as though I'm yet to reach my peak.
"Last year I did make some major improvements in my game. For the first time, I was able to get plenty of games in Super 14 and that helps build your confidence, makes you feel more comfortable."
Hoiles, who joined the ACT-based team from the Waratahs for the 2007 season, said he was especially pleased to be remaining in the Australian capital.
"Once I was told I was part of Australian rugby's future plans, there was no need to look any further than the Brumbies," he said.
"I thought when I came here - and I still believe - the Brumbies style of rugby suits my game and I've really enjoyed playing a more expansive brand of footy.
"I've loved living in Canberra and I believe it's the best place in the world to play rugby.
"It is a tight-knit group down here and it's great to be part of the Brumbies family for another two years. We have a great young side at the moment and everyone involved with the Brumbies is very excited about the future here."
Coach Laurie Fisher said Hoiles had been a consistent performer for the Brumbies.
"Since joining the Brumbies, Stephen's become an established member of the squad," Fisher said.
"He's a very mobile back-rower who gets through a tremendous amount of work and has a great understanding of the game."
"We've been very impressed with his rugby development over the past year-and-a-half and we're keen for him to continue to take that forward through to 2010."