Hill, 25, posted a career-high 1,479 yards and 12 scores on 87 catches in 16 starts last season for the Chiefs. The three-time Pro Bowl selection and two-time All-Pro also led the league with 15 yards per touch.
"I'm grateful for the opportunity to continue my playing career here in Kansas City," Hill said in a release from the Chiefs. "Kansas City is my home, and I appreciate the love and support from [Chiefs owner] Clark Hunt, coach [Andy] Reid and [general manager] Brett Veach along with my coaches and teammates. To Chiefs Kingdom, you're the best fans in the world."
Hill's contract extension comes months after he was investigated by the Johnson County District Attorney regarding injuries to his son. The prosecutor announced in April that Hill would not be charged.
The Chiefs suspended Hill from off-season activities during the investigation. Hill was cleared for training camp and the preseason after the NFL declined to discipline the wide receiver.
"We're pleased we were able to reach an agreement with Tyreek to keep him in a Chiefs uniform for the foreseeable future," Veach said. "He understands our expectations of him as a member of this team and community.
"This extension is contingent upon the conditions Tyreek agreed to adhere to upon his return to the team in July. Tyreek is an elite player in this league and has played a major role in our team's success, and we're pleased that he'll continue to make an impact for us."
Hill's new pact has an average annual value of $18 million per season, ties him with Odell Beckham Jr. as the second highest-paid wide receiver in the league behind New Orleans Saints star Michael Thomas.
The Chiefs face the Jacksonville Jaguars in their first game of the 2019 season at 1 p.m. EDT Sunday in Jacksonville.