The deal, which includes an opt-out clause and no-trade protection, contains escalators that could push the value as high as $150 million over the life of the contract, a source confirmed to ESPN's Jerry Crasnick.
The agreement and details of the deal were first reported Saturday by The Athletic.
Darvish had been one of the most coveted pitchers in this year's free-agent market and also reportedly received a substantial offer last month from Chicago's division rival, the Milwaukee Brewers. The Japanese right-hander also had been linked to the Rangers, Dodgers, Yankees, Twins and Astros this offseason.
According to ESPN Stats & Information, it is the fourth free agent contract in excess of $100 million to be given by the Cubs, which ranks second all-time behind the Yankees (6).
Darvish has averaged 11 strikeouts per nine innings over his career, which is the highest ratio in MLB history for pitchers with more than 100 career starts -- ranking just ahead of Randy Johnson and Chris Sale, who are tied for second at 10.6.
The deal comes less than a week before the Cubs are scheduled to begin spring training. The 31-year-old Darvish, a four-time All-Star selection, is expected to take the spot of Jake Arrieta, a free agent, in a Cubs rotation that is projected to include Jon Lester, Kyle Hendricks, Jose Quintana and Tyler Chatwood.
Cubs catcher Willson Contreras stamped his approval of the deal on Twitter.
The Cubs have reached the NL Championship Series in each of the last three years. In 2016, they won their first World Series crown since 1908.
According to ESPN Stats & Information, Darvish has a 2.42 ERA in eight career starts against the National League Central, including the postseason. He has never allowed more than three earned runs against an NL Central opponent.
Darvish was acquired by the Dodgers from Texas for three prospects just before last year's trade deadline, supposedly as the final piece needed to return a championship to baseball's biggest-spending team.
But the 6-foot-5 Darvish managed only four outs in losing Game 7 to the Astros. He became the second pitcher in World Series history with less than two innings pitched in two starts.
In 31 combined starts last season, he was 10-12 with a 3.86 ERA.
Darvish signed with Texas before the 2012 season and missed all of 2015 after elbow surgery. He has a career record of 56-42 with a 3.42 ERA and 1,021 strikeouts.
The Associated Press contributed to this report.