Fairbrother – who has made 110 appearances for the region – becomes the seventh player to agree new terms to remain at Rodney Parade.
Ashton Hewitt, Jared Rosser, Tavis Knoyle, Adam Warren, Matthew Screech and Lewis Evans have also signed deals as the squad continues to take shape for the 2019/20 campaign.
Born in Cornwall, Fairbrother joined Dragons in the summer of 2014 and made his debut against Connacht Rugby later that year.
The hugely popular 27-year-old – who has also had playing spells with Exeter Chiefs, Moseley, Cornish Pirates and Plymouth Albion – hit the hundred game milestone earlier this season for Dragons away at Franklin’s Gardens against Northampton Saints.
“I’m delighted to sign a new contract and extend my stay,” he said.
“I’ve really enjoyed the last five seasons here, this has become my home with my family and playing over a century of games means a huge amount to me.
“It’s been a tough season mentally and physically, but I’m constantly learning and trying to improve and still have so much more to give.
“There’s good competition for a starting jersey with my team-mates and I’ve also becoming one of the senior pros, working with the talented young props we have coming through the system.
“We’re all pulling together and determined to improve next season. The result at Judgement Day underlines the potential we all know we have here and it’s about kicking on and really delivering next year.
“Finally, a huge thank you to the fans who have always supported me since I arrived and became a ‘Cornish Welshy’.
“They’ve been absolutely superb and stuck with us through the ups and downs of the season. Our only focus is more big performances and wins for them!”
Head Coach Ceri Jones said: “It’s fantastic that Lloyd, a real cornerstone of our pack, has committed to the Dragons as we continue to shape the squad for next season.
“Lloyd has enjoyed a very strong season with competition from the likes of Leon Brown and Aaron Jarvis for a starting spot.
“He continues to work extremely hard on his game and is determined to be part of a successful future at Dragons – a region that he has really taken to his heart.”