Terms weren't disclosed, but the contract is worth $58 million, according to multiple reports.
The deal, which runs through the 2020 season, would be the largest ever awarded to a player subject to American draft rules with less than two years of service time. Cubs first baseman Anthony Rizzo signed a $41 million, seven-year contract in May.
According to The Associated Press, Simmons received a $1 million signing bonus and will earn $1 million this season. He will earn $3 million in 2015, $6 million in 2016, $8 million in 2017, $11 million in 2018, $13 million in 2019 and $15 million in 2020, the AP reported.
Simmons, 24, joins first baseman Freddie Freeman, right fielder Jason Heyward, starter Julio Teheran and closer Craig Kimbrel as players the Braves recently signed to new contracts. They have committed $280.7 million to the rising stars, including Simmons.
On Wednesday, the Braves also extended the contracts of general manager Frank Wren and manager Fredi Gonzalez. Both were entering the final years of their contracts.
Only 24, Simmons is widely considered to be baseball's best defensive shortstop. He would have been eligible for salary arbitration next week.
He won his first Gold Glove Award last season after leading the majors with 499 assists.
"We feel that Andrelton is one of the premier shortstops in the game today and we are happy that we were able to agree on this multiyear contract," Wren said in a statement.
Last season, Simmons batted .248 with 17 homers and 59 RBIs in 157 games as the Braves won the National League East.
Simmons hit only .216 against left-handers last season, and he hit only .219 in 283 at-bats as a leadoff hitter. The team took off when Heyward was moved to the leadoff spot, and Simmons was more productive in other spots in the lineup.
Simmons ranks with Freeman, Kimbrel, Teheran, Heyward, Justin Upton, left-hander Mike Minor and others as the foundation for the Braves' future. Chipper Jones retired after the 2012 season, and Tim Hudson and catcher Brian McCann departed as free agents after last season, leaving the team that won 96 games last year with a young roster.
The Associated Press contributed to this report.