Terms of the deal weren't announced, but the Detroit News reported it was for $25.5 million.
Ericsson, 29, has developed into a top defense-minded defenseman for the Red Wings since being drafted by the club with the last-overall pick in the 2002 NHL Entry Draft.
Over 292 career games with Detroit, the Sweden native has recorded 14 goals and 48 assists, including one goal and four assists in 15 games this season.
He was in line for free agency at the end of this season. The long-term signing shores up a Red Wings blue line that has been hit with the retirements of Nicklas Lidstrom and Brian Rafalski this year.