Urlacher, a Pro Bowler in each of his three NFL seasons, signed a nine-year contract. He had been eligible to become an unrestricted free agent after the 2004 season.
Terms of the deal were not disclosed, but reports indicate the signing bonus could be as high as $16 million.
Urlacher, regarded along with Ray Lewis as the NFL's best interior linebacker, established a club single-season record with 214 tackles in 2002, becoming the first Bears defender to eclipse 200 tackles and besting the previous mark of 190 set by Butkus in 1972.
"This is a very exciting day for me and my family," Urlacher said at a news conference. "This is a culmination of a lot of years of hard work. I don't really know what to say. I'm going to be a Bear for the rest of my career, and that's exciting for me."
"This is another great day in our franchise history," said Chicago General Manager Jerry Angelo. "It's something that we have been working on for it seems like a long time and it culminated (Tuesday). We're very proud and happy that we're able to share this news now. Brian is very much a centerpiece of our football team at present, and we rewarded him accordingly."
Also in 2002, he became the seventh player in franchise history to earn Pro Bowl nominations in each of their first three NFL seasons. Hall of Famers Dick Butkus and Gale Sayers were the last to do it in 1965-67.
At age 25, Urlacher is already an icon in Chicago. His replica No. 54 was the top selling jersey in the NFL last season, and he was the leading vote getter by fans among defensive players in Pro Bowl balloting.
In 2001, the 6-4, 258-pounder finished fifth in voting for NFL MVP, the highest of any defensive player ever, and was named NFL Defensive Player of the Year by Football Digest. In 2000, he was tabbed NFL Defensive Rookie of the Year after leading the Bears with 165 tackles and eight sacks.
"He's a pillar that we will continue to build on and around for many, many days to come," Angelo said. "Now all we've really done is gold-plated it."
"I've been here three years, and I don't think it really gets much better football-wise anywhere else than this place," Urlacher said. "With the fans and now we have a new stadium coming in, I don't see it getting any better anywhere else. I love it. My family's here now. It was an easy decision for me. The organization is committed to winning, I know that. We're signing the right guys, and we're taking steps in the right direction. Our organization is committed and our players are committed."