The Pacers made keeping West their top offseason priority and quickly worked out a deal that will give the 32-year-old a raise over the $10 million he made in each of the past two seasons. West averaged 17.1 points and 7.7 rebounds and led the Pacers to the Eastern Conference finals last season.
After struggling to get a long-term deal two years ago coming off a major knee injury, West has proven to be durable in his first two seasons with the Pacers, missing just nine games.
Yahoo! Sports first reported West and the Pacers had come to an agreement.
The Pacers also reached an agreement with point guard C.J. Watson this week to bolster their bench. They are also expected to look to sign young star Paul George to a contract extension before the start of next season.
Information from ESPN The Magazine's Chris Broussard was used in this report.