Harden will be paid a total of about $80 million over five years, the Houston Chronicle reported.
"James Harden is the foundational-type player we have been looking to add," Rockets owner Leslie Alexander said in release posted on the team's website. "He is a tremendous, young player with the ability and skill set to be an all-star. He is ready to make the next move up to join the elite players in the NBA. As I said when we traded for James, he along with the mix of young players we already have in place, such as Jeremy Lin, Chandler Parsons and Omer Asik, gives us a solid group of young, talented players who will help get us back to a championship level."
Harden, guard Daequan Cook, forward Lazar Hayward and center Cole Aldrich arrived in Houston from Oklahoma City Saturday in a trade for guards Kevin Martin and Jeremy Lamb, two first-round draft picks and one second-rounder.
Harden averaged 16.8 points and 3.7 assists per game last season when the Thunder won the Western Conference championship.
Sports Network reported league sources had said Harden turned down a four-year deal worth up to $54 million with the Thunder before the trade.