A report on the team's Web site said the deal was worth $54 million. Austin had been scheduled to make $3.168 million this season and was not under contract beyond 2010.
The new contract will make him one of the highest paid receivers in the NFL after he burst onto the scene with 1,320 yards and 11 touchdowns during a Pro Bowl season a year ago.
In the fifth week of the 2009 season, Austin set a team record with 250 yards on 10 catches and scored two touchdowns in a 26-20 overtime win over Kansas City.
"It was one of the greatest games in NFL history," Dallas Coach Wade Phillips said in announcing the new contract.
Dallas opens its season Sunday night in Washington.
"This is great for me, but the most important thing is to get ready for the Redskins," Austin said. "That's still the No. 1 goal for me and this team. We want to win as many games as possible."
Austin is beginning his fifth NFL season, having been originally signed as an undrafted free agent.