Mills is a member of the current England U20s squad. It is his second season in the set up, having been a pivotal part of the 2011 Six Nations and Junior World Cup campaigns.
He started England's recent U20s Six Nations game against France at fly half and also donned the number ten shirt for Gloucester's LV= Cup fixture against the Cardiff Blues at Kingsholm.
And he caught the eye of a televised audience when he came off the bench in Gloucester's Aviva Premiership victory at Bath in February when he kicked the match winning penalty.
Head Coach Bryan Redpath told the club website today of his delight at Mills' decision to remain at Kingsholm.
"I'm very happy because Ryan is a very talented young player and plenty of teams would love to have him in their squads.
"He's come through very well. Physically, he's been able to hold his own in senior rugby and it's now about him getting more game time and developing his game. He's certainly got an exciting future."
Mills himself is now looking forward to the next couple of years with Gloucester.
"It's been an incredible couple of years. I've enjoyed the experience of playing with Hartpury and, of course, being part of the England U20s squad who are a great set of lads.
"The challenge for me now is to kick on and try and force my way into the Gloucester team on a regular basis.
"I think my game has come on leaps and bounds, I've had some great people to learn from here at Gloucester, coaches and senior players alike, and I'm really happy to have signed my new contract."