Wales star extends stay in England
Faletau has made 29 appearances since arriving at the Recreation Ground from Welsh regional side the Dragons at the start of last season and is now a key member of the pack at the Recreation Ground.
The British and Irish Lion was linked with a return to the Dragons with just a year to run on his previous deal at The Rec.
Faletau will not be following the lead of the likes of George North, Leigh Halfpenny and Ross Moriarty by heading back to Wales after committing his future to the Premiership side.
Bath did not specify the exact length of Faletau's contract extension but the director of rugby Todd Blackadder said: "Toby is one of the most admired players in world rugby and he has shown that for Bath and for Wales and on his two tours with the British & Irish Lions.
"Toby recognises that Bath is the place where he can best achieve his goals, which is ultimately challenging for the major trophies.
"We are committed to retaining our best players and Toby falls into this category."
Faletau, who has won 72 Wales caps and a further four for the Lions, said: "I'm delighted to extend my contract at Bath. I feel my best years are still ahead of me, and this is the place I want to play, develop and win trophies.
"I have a great relationship with Todd and the coaching team and believe in their long-term vision," the 27-year-old added. "I also believe in the squad we have and that we can achieve our goals."
Bath are currently eighth in the 12-team Premiership and won't feature in the title deciding play-offs.