The deal is worth $7.75 million, according to ESPN.com's Field Yates. The extension is a team option that will keep Matthews in Tennessee through the 2019 season if the Titans exercise it.
Per Spotrac, Matthews will make $5 million in base salary this season after signing a three-year, $15 million deal with Tennessee in 2016.
After setting career highs with 65 catches for 945 yards and nine touchdowns in 2016, Matthews' numbers dipped last season to 53 receptions for 795 yards and four scores as quarterback Marcus Mariota struggled mightily.
Matthews is on the physically unable to perform list with an undisclosed injury, and his status for Week 1 of the regular season is unclear.
The extension is a no-risk move for the Titans since they can simply walk away from the deal if Matthews has a down year.
Conversely, Matthews is taking a risk since the Titans could let him walk if he struggles or has an injury-plagued 2018.
The 28-year-old wideout is Tennessee's most sure-handed pass-catcher aside from tight end Delanie Walker, and he could be key to Mariota's continued development if he returns next season.
Also, since the jury is still out on 2017 first-round pick Corey Davis, Matthews stands as the only sure thing in Tennessee's receiving corps when healthy.