According to Elliotte Friedman of Sportsnet, the deal is expected to pay him $12.5 million per season.
The 20-year-old megastar was dominant in his second NHL campaign, registering 30 goals and 70 assists for 100 points to win the Art Ross Trophy as the league's leading scorer.
McDavid also won the Hart Trophy as the NHL's most valuable player, as well as the Ted Lindsay Award, which is given to the NHL's most outstanding player, as voted on by players.
Most impressively, McDavid was the driving force behind Edmonton's return to the playoffs in 2016-17 after a decade-long drought.
It was clear during McDavid's rookie season, 2015-16, that he was a special player poised to dominate the league for many years to come.
An injury limited the former No. 1 overall draft pick to 45 games, but he still managed 16 goals and 32 assists for 48 points.
Oilers general manager Peter Chiarelli made it clear in May that locking up the phenom long term was his top priority, according to NHL.com's Derek Van Diest.
Chiarelli also suggested he would be able to put together a strong roster moving forward even though McDavid would take up a sizable chunk of salary-cap space:
"Cap-wise, we're OK next year, we could basically stay the same, it's the following year when Mr. McDavid's contract will kick in, so I have to be cognizant of that. But we've got a lot of different rosters we've looked at in the sense, at numbers, numbers for specific guys, term. But the [NHL salary] cap is expected to stay flat or raise a little bit, so we're working off $73 [million], $74 [million], $75 [million] and we'll see where it's at. We'll certainly have the resources to put another contending team in place."
Edmonton has a number of promising, young pieces around McDavid, and as long as he is on the team, the Oilers have a chance to be competitive.
There is little doubt McDavid will be the face of the NHL in the coming years, and Edmonton has put itself in position to vie for multiple Stanley Cups by keeping him in the fold.