The deal for the pending free agent will keep him with the Giants through the 2015 despite decreased productions over the last two seasons.
Terms of the contract weren't announced, but CBSSports.com and the San Francisco Chronicle reported it was worth $35 million, $5 million less than his expiring two-year deal.
The contract is pending a physical.
Lincecum, a key part of two World Series titles for Giants, went 20-29 with a 4.76 earned run average and 383 strikeouts in 65 starts during the last two years -- well short of his 2.98 ERA from 2007-11.
The 29-year-old, however, tossed a no-hitter against San Diego this past season, finishing with a 10-14 mark and 4.37 ERA over 197 2/3 innings.
Swim Week Miami Beach 2014 [PHOTOS]