The deal was announced Friday at a news conference attended by Coach Andy Reid.
McNabb agent Fletcher Smith told the Philadelphia Inquirer the deal makes his client one of the highest paid quarterbacks in the NFL.
McNabb signed a 12-year contract in 2002, but had the final three seasons voided after incentive clauses were reached with the restructured deal.
"The Philadelphia Eagles organization and the entire city of Philadelphia are fortunate to have a quarterback the caliber of Donovan McNabb," Reid said on the team's Web site.
"It was appropriate to make some adjustments so that he was rewarded commensurate with the way he plays," team President Joe Banner told the newspaper.
McNabb, a 10-year veteran from Syracuse and Philadelphia's first-round pick in the 1999 NFL Draft, is the franchise's all-time leader in passing yards (29,320), touchdown passes (194), attempts (4,303) and completions (2,534).
The five-time Pro Bowl selection has led the Eagles to more regular season victories (82) than any other quarterback in team history.
Exploding whale video goes viral on Internet
Couple mistakenly served bag of cash at McDonald's drive-thru