"We waited a long time, me and my family, to get a deal and I'm very happy that we were able to get it done before training camp," Gagne said.
Selected 22nd overall in the 1998 draft, Gagne posted career highs last season with 33 goals and 33 assists in 79 games. One of the most exciting young players in the NHL, the 22-year-old Quebec native also won a gold medal with Canada at the Salt Lake City Olympics, recording a goal and three assists in six games.
"We think that Simon is one of the better young players in the game and certainly has a chance to be a terrific player in the National Hockey League for the Flyers," general manager Bob Clarke said.
Named to the NHL All-Rookie Team after the 1999-2000 season, Gagne made his first All-Star Game appearance in his second campaign and scored two goals, including the game-winner, for the North American team.
In 228 NHL games, Gagne has 80 goals and 173 points, adding eight goals and five assists in 28 playoff contests.