The 6-foot-3 inch, 260-pounder will receive $62.5 million with a $10.1 million signing bonus, making him the highest paid linebacker ever.
"I'm looking forward to showing them that they didn't make a mistake and that they've got the right guy," Suggs told the Baltimore Sun after Wednesday's deadline on signing franchise players for the 2009 season.
"Getting a deal done with Terrell is consistent with our history of retaining our best Pro Bowl players," General Manager Ozzie Newsome said.
Suggs, a former NFL Defensive Rookie of the Year, made 68 tackles, returned two interceptions for touchdowns and earned his third Pro Bowl berth last season.
Baltimore's first-round pick in the 2003 NFL Draft has 53 sacks, 261 tackles (53 solo) and five interceptions in six seasons.