The Houston Chronicle said the deal was reached after hours of negotiations on Monday between agent Tom Condon and Texans general manager Rick Smith and vice president of administration Chris Olsen.
Watt, the 11th overall pick in the 2011 NFL Draft, had two years left on his contract, including a base salary of $1.9 million this year and a $6.9 option year in 2015.
Watt's new deal is worth $100 million over six years, including $51.876 million guaranteed, according to the paper. Those numbers make Watt the highest paid defensive player in the NFL.
Watt's contract tops that of a six-year, $96 million deal Buffalo gave former Texans lineman Mario Williams.
Watt earned NFL Defensive Player of the Year honors in 2012 after posting 20 1/2 sacks. The Wisconsin product has recorded 217 tackles and 36 1/2 sacks in 48 games with the Texans.