League sources told ESPN and MLB Media that Strasburg's contract is worth a record-setting $245 million. The agreement surpasses the previous record for a pitcher's contract, set by David Price when he signed a seven-year, $217 million deal with the Boston Red Sox in December 2015.
"We are very excited to welcome Stephen Strasburg and his family back to the Washington Nationals," Nationals owner Mark D. Lerner said in a statement. "His tremendous talent, work ethic and leadership have been a staple of our organization since the day we selected him in the 2009 MLB Draft.
"We would not have won the 2019 World Series or accomplished everything we have these last 10 seasons if not for Stephen's many contributions."
Strasburg, who opted out of the final four years of his contract with Washington, entered free agency after recording a 3.32 ERA and a career-best 18 wins last season. He struck out a career-high 251 batters in 33 starts and led the National League with 209 innings pitched.
The 31-year-old right-hander continued his strong play during the Nationals' run to their first World Series title, becoming the first pitcher in major league history to win five games in a single postseason without a loss. His 47 strikeouts were tied for the second most in a single postseason and he posted a 1.98 ERA in six total appearances.
Strasburg, who had Tommy John surgery shortly after his MLB debut in 2010, has a 112-58 record with a 3.17 ERA and 1,695 strikeouts in parts of 10 seasons in the league.