The 27-year-old will make $17.88 million in the final season of his initial three-year deal.
Monroe has spent the past two seasons with the Bucks after beginning his career with the Detroit Pistons. Coming into the year, he had averaged at least 15 points and eight rebounds per game in five straight seasons.
This run of consistency ended in 2016-17 with Monroe coming off the bench for the first time in his career. He didn't make a single start in 81 appearances, averaging 11.7 points and 6.6 rebounds per game, marking his worst numbers since his rookie year.
Despite the reduced statistics, the center remained a positive influence on an otherwise young team with efficiency that ranked among the best in his career.
Monroe also reached the postseason for the first time, averaging 13.2 points per game in six contests.
"No question, he helped himself with the way he played in the playoffs," a front office official told Gery Woelfel of the Journal Times. "I thought he did a really good job on [Toronto's Jonas] Valanciunas."
Although he had a chance to secure a long-term deal in free agency, it would have been difficult to improve upon the money he will get in the 2017-18 season with Milwaukee.
With a young corps of players that should only get better, the Bucks should be a serious threat in the Eastern Conference next season. The organization hasn't won a playoff series since 2001, but that could change in the upcoming year.