The Bills announced Friday that Allen has agreed to a six-year deal that will keep him with the organization through the 2028 season.
Per ESPN's Adam Schefter, Allen's contract extension includes $150 million guaranteed and can be worth up to $258 million.
There was a ticking clock on these negotiations, as general manager Brandon Beane told reporters earlier this week the two sides agreed not to hold talks once the regular season began if a deal couldn't be reached.
"Josh and I are in lockstep on that," Beane said. "There will be no negotiating in-season. At some point we will press the pause button."
The 24-year-old is set to enter 2021 with just a $6.9 million cap hit in the fourth year of his rookie contract.
Allen is coming off a monster season in which he totaled 4,544 passing yards and 37 touchdowns, both top-five in the NFL, while adding 421 rushing yards and eight rushing touchdowns.
Buffalo thrived behind the talented quarterback, producing the No. 2 scoring offense in the NFL while finishing 13-3 and winning its first division title since 1995. A first-round victory over the Indianapolis Colts represented the franchise's first playoff win in 25 years, and the Bills reached the AFC Championship Game before losing to the Kansas City Chiefs.
It unsurprisingly led to talk of a "massive contract extension," as Ian Rapoport of NFL Network reported in January.
Allen now has long-term financial security, while the Bills have locked down their face of the franchise for an extended stretch.
The 2018 No. 7 overall draft pick had always been known as an above-average runner, but he has made dramatic improvements as a passer over his three seasons in the NFL. After recording a 67.9 quarterback rating as a rookie, the mark jumped to 85.3 in 2019 and then 107.2 in 2020.
Allen's development gives him huge upside for the future, especially if he keeps picking up yards on the ground.