Wales fly-half Costelow signs new Scarlets deal
The 24-year-old has played 67 matches and scored 420 points for the Llanelli side since arriving from Leicester Tigers in 2020.
He has also been capped 18 times for Wales, but missed this year's Six Nations due to a shoulder injury.
"I am really grateful to the Scarlets for giving me this chance," Costelow said.
"We have a good group here, we're ticking along nicely and it is a place where I want to be right now. We have had a lot of learnings this season, but it has been a good year."
Scarlets head coach Dwayne Peel said: "We all know his quality, he is still only 24, but he has a lot of experience already, both for us and at international level.
"He is going to have a big part to play in this side over the coming seasons."
Wales' Mathias set to return for Scarlets at Lions
Scrum-half Blacker 'excited' to return to Scarlets
Costelow made his long-awaited return from injury in Scarlets' victory over United Rugby Championship leaders Leinster, which has put the region in the play-off spots with two games to play.
"It is never nice to get injured, you want to play as much rugby as you can, but being back out there with my mates against Leinster, playing in front of the fans again, it was awesome," said Costelow.
Scarlets face Lions in Johannesburg on Sunday before moving on to Durban to take on Sharks in the final round six days later.
"We are under no illusion how tough these games are going to be, but we have spoken this week, we have a chance to write our own history and really kick on as a side," added Costelow.
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