Bowe, 27, had been seeking a long-term deal. The Chiefs designated him their franchise player in March. He is expected to earn about $9.4 million under the agreement with the team.
Bowe was the 23rd overall picked by Kansas City in the 2007 draft and has played his entire five-year NFL career with the Chiefs. He appeared in 16 games last season, catching 81 passed for 1,159 yards and five touchdowns.
In his 75-game career, Bowe has 356 receptions for 4,927 yards and 36 touchdowns. He was selected to the Pro Bowl after the 2010 season.
Kansas City also announced that offensive tackle Ray Willis was retiring. Willis signed with the Chiefs as a free agent on July 31. He played in 44 games over five seasons. He played for the Seattle Seahawks, Miami Dolphins, New Orleans Saints and New York Jets in his career.