Edmonton announced the deal via its official website. Draisaitl will carry an $8.5 million cap hit each season for the duration of the new contract.
The 21-year-old German center has made steady improvement since the Oilers selected him with the third overall pick in the 2014 draft.
Draisaitl tallied just nine points (two goals and seven assists) in 37 games during his first NHL season, but he's put up 128 points (48 goals and 80 assists) in 154 appearances over the past two years to emerge as one of the league's most promising players.
Micah Blake McCurdy of HockeyViz provided a closer look at the forward's impact:
Draisaitl also provides the Oilers with lineup flexibility. He's spent a lot of time playing right wing alongside Connor McDavid, which has helped bolster his scoring totals, but he's capable of returning to his natural center position to give the lines more depth when needed.
It's the second massive contract extension Edmonton has handed out this offseason. The front office previously signed McDavid, the heir apparent to Sidney Crosby as the face of the NHL, to an eight-year, $100 million deal in July.
With two of the franchise's essential building blocks locked in to long-term deals, the Oilers will look to become perennial championship contenders. They advanced to the second round of the playoffs last season before getting eliminated in seven games by the Anaheim Ducks.