The club did not disclose monetary details when the deal was reached Sunday, but The Philadelphia Inquirer reported the 31-year-old right-hander will receive $37.5 million in three years.
Lidge has recorded 19 saves in 35 games this season and has a 2-0 record with a 0.77 ERA, 15 walks and 47 strikeouts in 35 innings. He is one of two closers who have not blown a save chance this season. The other is Mariano Rivera of the New York Yankees.
Philadelphia acquired Lidge and infielder Eric Bruntlett in an off-season trade with Houston.
Lidge is being paid $6.35 million in the final year before he could become a free agent.
In six seasons, he is 25-20 with 142 saves and a 3.10 ERA in 413 appearances.