The 20-year-old openside has enjoyed a breakthrough season for the region, making 16 appearances and featuring in European Champions Cup clashes with Ulster, Leicester and Racing 92.
A Wales Under-20 cap, Davis is another product of the Scarlets Academy which has produced so many international players over recent years.
He said: “It is such a good feeling to sign my first professional contract with the Scarlets where I started in the Academy when I was 16.
“I am very grateful for the opportunity I have had to put on the jersey this season and I feel I’ve learnt a huge amount from the experience.”
Davis is viewed as a player with a bright future and the Scarlets are delighted that the Llandeilo product has committed to his home region.
“Dan is a player the Scarlets and Welsh rugby can be very excited about,” said Scarlets head coach Wayne Pivac.
“He is still learning and developing his game, but he has already shown this season what he is capable of both at PRO14 and European level.
“It is great news for him and the Scarlets that he has committed his future to the region.”
Scarlets general manager of rugby Jon Daniels said: “Dan is a hugely talented young back-rower who we believe has a big future in the professional game.
“He has come through the region’s academy system to make his mark this season and will be challenging for the Scarlets jersey as part of an exciting back-row pool next season.”
