The Wizards also exercised their fourth-year contract option on center JaVale McGee on Friday.
Blatche's extension adds three years to his current contract, which had two years remaining.
Blatche averaged career highs of 14.1 points, 6.3 rebounds and 2.1 assists last season. He was the team's top scoring threat after the Wizards began dismantling their roster around the trade deadline.
McGee is about to start the third year of his four-year rookie contract. The fourth-year option is worth $2.4 million.
McGee averaged 6.4 points and 4.0 rebounds last season.camp, which begins on Saturday.