A source told ESPN NFL Insider Adam Schefter that the extension is for five years and is worth $50 million, including $22 million guaranteed.
"Honestly, I don't want to be anywhere else than here," Reed said Thursday. "I love it here. I love playing for the Redskins. I love all my coaches and all my teammates. I love this area, man. They gave me that deal, and I took it. It was a solid deal, and I'm just happy to be a Redskin."
Durability has always been an issue with Reed. He missed a combined 12 games his first two seasons, but he appeared in 14 last year after undergoing a more rigorous offseason training regimen that he said has continued this year.
"It means a lot that the Redskins invested that kind of money into me and think that highly of me as a player and as a person," Reed said. "That means a lot to me. I'm going to show them that they made a good investment, and I'm going to prove them right in making me one of the highest-paid [tight ends]."
The new deal keeps Reed with the Redskins through the 2021 season.
He caught 87 passes for 952 yards and 11 touchdowns last season. The third-round pick in the 2013 draft has 182 career receptions for 1,916 yards and 14 touchdowns for the Redskins.
"It changes a lot," Reed said. "... It's a life-changing thing, and I'm just real blessed."
The Redskins added depth at the position in the offseason by signing Maryland product Vernon Davis from the Denver Broncos. They also re-signed Logan Paulsen and expect Niles Paul to return from a gruesome ankle injury that cost him the entire season.
ESPN's John Keim and The Associated Press contributed to this report.