The agreement keeps the right-handed pitcher tied to the team through the 2019 season with an option for 2020. ESPN said the contract extension is worth $180 million.
Verlander, 30, was 17-8 with a 2.64 earned run average and 239 strikeouts in 33 starts in 2012. That followed his 24-5 record in 2011 when he had a 2.40 ERA and struck out 250.
In eight seasons -- all with the Tigers -- Verlander is 124-65 with a 3.40 ERA. He's led the American League in wins twice (2009, '11) and strikeouts three times (2009, '11, '12).
"Justin is one of the premier pitchers in baseball and we are thrilled to keep him in a Tigers uniform for many years to come," David Dombrowski, team president, chief executive officer and general manager, said in a statement.
"Justin has been a Tiger for his entire career and he is on pace to be one of the greatest pitchers in this illustrious franchise's history."
Verlander is a five-time all-star selection and was the AL Rookie of the Year in 2006. He pitched no-hitters in 2007, beating the Milwaukee Brewers, and 2011, defeating the Kansas City Royals.