The first series followed a group of young Brits who travel to the holiday resort to work and party in the area.
Channel 4's Factual Entertainment team has commissioned a second run after the first series performed well in the ratings and through social media.
The second series will give a further glimpse into the lives of the British holiday-makers seeking a hedonistic escape on a cheap budget.
It has been commissioned by Channel 4's Head of Factual Entertainment, Liam Humphreys, and Commissioning Editor, Tina Flintoff. It will be made by production company Dragonfly.
Filming for the series will take place during the summer of 2013, and will be broadcast at some point in 2014.
Simon Dickson, Managing Director at Dragonfly, said: "A lot of late nights went in to producing What Happens in Kavos... so everyone at Dragonfly was delighted when it performed so well.
"The Channel 4 Factual Entertainment team were great to work with, they really encouraged us to bring a fresh perspective to the well-worn territory of young Brits on holiday. Together, we've created a show that we think manages to be simultaneously eye-popping and classy."
Commissioning Editor Tina Flintoff added: "I'm delighted we're commissioning a second series of What Happens in Kavos...
"The show has caught the imagination of our core audience of 16-34 year olds and has generated an interesting debate about the lives and loves of young Brits who seem to be seeking more extreme ways to keep themselves entertained than ever before''.