Rea, 26, made his premier class debut last year for Honda's factory team, acting as stand-in for the injured Casey Stoner at Misano and Aragon.
He had been in talks with Ducati about a switch to join its satellite Pramac squad next year, but has now opted to stay in WSBK, where he has won races every year since 2009.
"It's been a big decision that I've thought long and hard about because there were some other options to consider," said Rea, who is currently recovering from a broken femur suffered in the German WSBK round.
"However, at the end of the day it was an easy choice because of the faith and respect that I have for the team that I've been with for six years and the company that I have been with my entire career.
"I know how hard the guys work to make the Honda competitive and I know that we have the potential to fight again for more podiums and race wins and the championship next season."
Rea's Pramac talks throw Ben Spies' future into fresh doubt.
The Texan is adamant his place on the 2014 MotoGP grid with Pramac is not in doubt despite injuries restricting him to starting two races since joining the squad.
Yonny Hernandez was recently confirmed as an indefinite stand-in for Spies.