Sources told MLB.com that the deal is worth $40 million. The agreement helped the parties avoid salary arbitration. It includes a club option worth $15 million for 2023.
The option includes a $2.75 million buyout. Severino is taking his physical Friday to complete the pact.
Severino, 24, posted a 3.39 ERA and a 19-8 record in 32 starts last season for the Yankees, earning his second consecutive All-Star selection. He posted a 14-6 mark with a 2.98 ERA in 31 starts during his 2017 campaign. Severino owns a 3.51 ERA and a 41-25 record in 96 career appearances, all with the Yankees. The right-handed pitcher made his Major League Baseball debut in 2015.
Yankees manager Aaron Boone said Wednesday that he expected Severino to start for the Yankees in their opening day matchup against the Baltimore Orioles on March 28. He also started 2018 opening day for the Yankees against the Toronto Blue Jays.