Conley Sr., who along with Bill Duffy represents his son, would not specify the terms of the contract. But other sources with knowledge of the situation said the deal is worth $45 million over five years.
The Grizzlies' decision to lock up Conley as their point guard of the future was sparked by his excellent play in the preseason and over the regular season's first three games.
Conley, the fourth pick of the 2007 draft, has averaged 15 points, 8.3 assists and a league-high 3.67 steals in leading Memphis to a 2-1 start.
"Did I envision that Mike would play like this? Yes," Conley Sr. said in a telephone interview on Monday. "But I did not have confidence that the Grizzlies would embrace him like they have with this contract. The first thing I told them when we began negotiating was that I didn't want to go further with these discussions unless Mike was their guy. They said he's their guy."
Conley's signing came just minutes before Monday's 11:59 p.m. ET deadline for 2007 draft picks to sign contract extensions. With teams reluctant to sign players because of the uncertainty of the league's next collective bargaining agreement, Conley became only the fourth player from his class to receive an extension.
He joins Oklahoma City's Kevin Durant, Chicago's Joakim Noah and Atlanta's Al Horford, who signed with the Hawks Monday afternoon. The four signees is an all-time low for the league, besting the six players who scored extensions from the class of 2006.
Conley, 23, had been considered a disappointment for most of his first three seasons, but began a dramatic improvement late last season.
In addition to becoming better at running the pick-and-roll, Conley, at the urging of head coach Lionel Hollins, has become more assertive and a more outspoken leader.
"This year, he's running the team," one scout said of Conley. "In the past, he'd just run the offense, but now he is running the team."
Grizzlies GM Chris Wallace, who has been impressed with how Conley has orchestrated an offense that includes Rudy Gay, O.J. Mayo, Zach Randolph and Marc Gasol, began negotiating with Conley Sr. about a week ago.
Chris Broussard covers the NBA for ESPN The Magazine.