No financial terms were released. He would have been an un-restricted free agent after the 2005 season.
Morgan earned his first career Pro Bowl berth as the NFC's starting middle linebacker in 2004.
"We're certainly glad that it's agreed to and that he's going to be here for at least five more years after this season," said Panthers General Manager Marty Hurney. "Dan is a player and former first-round draft choice who makes a big difference to our defense. We think it's important to keep those guys together and to keep continuity."
In the 2004 season, Morgan started all 12 games in which he played and established a career-high with 109 tackles. He also had two sacks and two interceptions.
In his four-year career, Morgan has played in 42 games made 340 tackles and four sacks.