The deal runs through 2008, and reportedly will pay him a base salary of $9 million annually from 2005-08.
He initially will receive $3.6 million up front.
The 6-foot-3, 307-pound Forney, 25, was the Falcons' second of four seventh-round draft choices in 2001 out of Hawaii. He has started 36 of 42 games played for the Falcons in the last three seasons, and started all 16 games at right guard for the first time in his career in 2003.
"It's part of our plan to keep the core of our football team together and Kynan Forney is a young player who will continue to get better under the coaching of (assistant head coach and offensive line coach) Alex Gibbs," said President and General Manager Rich McKay.