Byfuglien, 25, has racked up 17 goals and 26 assists in 58 games so far this year for the Thrashers, who obtained the 6-foot-5, 265-pound blueliner in a trade from the Chicago Blackhawks before the season.
Terms of the contract were not disclosed, but The Atlanta Journal-Constitution reported it is for five years and worth $26 million.
"Dustin has emerged into an elite player this season and been invaluable as a leader both on and off the ice," Thrashers General Manager Rick Dudley said. "It was a priority to sign him and we're looking forward to witnessing his all-star caliber play for many years to come."
Byfuglien helped lead the Blackhawks to a Stanley Cup title last season, logging 11 goals and 16 points in 22 post-season games after compiling 17 goals and 17 assists in 82 regular-season contests.