The 27-year-old Polota Nau, who has 44 Test caps to his name, is now signed up until 2016, while Australia Rugby also confirmed Palu has agreed a two-year extension.
Polota Nau has been sidelined by a broken arm which will force him to miss the upcoming visit of the British and Irish Lions, but he is already looking forward to making a return, saying his desire for silverware with Australia and the Waratahs led him to reject moves overseas.
"I'd like to earn the right to win a few trophies," he said. "The Bledisloe Cup in particular. New Zealand has had that for far too long and I'd like to be around to help Australia get it back."
Having made his Test debut in 2005, Polota Nau has been a regular since 2008 and helped Australia to third place at the 2011 World Cup in New Zealand.
Palu, 30, also turned down the chance to move abroad as he looks to use the final years of his career to end a long wait for silverware with the Waratahs.
"I'm happy to get the contract negotiations out of the way, and my playing future sorted," Palu says.
"Playing for the Wallabies and the Waratahs has meant a lot to me. Neither were opportunities that I really wanted to give up, but I was also mindful of the fact through the negotiation process that I can't go on forever.
"I've got two children now, so maximising my opportunities to secure their future and that of myself and my partner was the main priority, but the Australian Rugby Union and the Waratahs were very understanding of that, and we all got the outcome we were looking for."
Having made his debut in 2006, Palu has played in 46 Tests for Australia, leaving him 11 shy of Australia's most capped number eight, Toutai Kefu.