Ian Rapoport of the NFL Network first reported terms of the new deal.
Diggs has made steady progress since the Lions selected him in the sixth round of the 2015 draft. He tallied 55 combined tackles, nine passes defended, three interceptions and a sack while playing all 16 regular-season games during the 2017 season.
The 25-year-old Texas native converted from cornerback to safety as part of his best statistical season to date. He's expected to remain there heading into the 2018 campaign, though he could still move around the defensive backfield depending on need.
"I feel comfortable anywhere," Diggs told reporters in May. "I'm a football player, man. That's always been my M.O., since I played little league football. I've been able to play a little bit everywhere. I just like to play ball, go out and compete.
"Wherever they put me each and every week, I'm going to compete, and I'm going to go do my best to win that matchup."
Strong safety is the best fit for now since the Lions feature Darius Slay, Nevin Lawson and Jalen "Teez" Tabor as their top three cornerbacks. If an injury arises at corner, however, Diggs could shift back to a nickel role, with Tavon Wilson or Miles Killebrew taking over at safety.
Either way, Diggs is in line to play a key role throughout the upcoming season, which kicks off for Detroit at home next Monday night against the New York Jets.