Fernando Torres will join Milan permanently on January 5 ahead of his expected return to Atletico Madrid.
Liverpool boss Brendan Rodgers has insisted Mario Balotelli will not be going out on loan in the January transfer window.
The 33-year-old former Motherwell midfielder has been with Caley Thistle since January 2009.
Foran's contract was due to expire at the end of the campaign and his decision to extend his stay in the Highland will end speculation he was about to join former Inverness boss Terry Butcher at Hibernian.
Chairman Kenny Cameron has moved quickly though to reward Foran, who has been a key player in the club's challenge to reach European level in the past couple of seasons.
"Inverness is a special place with a very special football club and I'm delighted to commit my future to here", Foran said.
"I've had a marvellous five years with Caley Thistle and I've been made to feel very wanted.
"The chairman and board and the supporters have been very supportive and now that everything is arranged I can focus on trying to help the team to have as successful a season as possible.
"The spirit among the players is very positive, they're a great bunch of lads, and the motivation levels are high."