Sources told ESPN that Bledsoe's deal is for four years and worth $70 million. The team hasn't released financial details of the agreement.
The 29-year-old Bledsoe is in his second season with the Bucks after the team acquired him in a trade with the Phoenix Suns on Nov. 7, 2017.
"We are excited that Eric will continue to be a core part of the Milwaukee Bucks," Bucks general manager Jon Horst told the team's official website. "Eric is instrumental to our success and we're proud that he is committed to the Bucks."
The veteran guard is averaging 15.9 points, 5.5 assists and 4.7 rebounds this season. He is shooting a career-best 49.2 percent from the field in the 2018-19 campaign.
Bledsoe has scored in double figures 49 times this season and had his first triple-double of the year against the Sacramento Kings on Wednesday.
Bledsoe is in his ninth season in the NBA. The Oklahoma City Thunder selected him in the first round of the 2010 NBA Draft, but traded him to the Los Angeles Clippers. He has appeared in 553 games (391 starts) with the Clippers, Suns and Bucks.
The Kentucky product has averaged 14.0 points, 4.8 assists, 3.9 rebounds and 1.5 steals per game in his career. Bledsoe has played in 24 postseason contests and averaged 13.6 points, 3.7 assists and 3.6 rebounds.