The deal is the maximum five-year extension worth $120 million, according to league sources. The extension kicks in with the 2016-17 season.
Lillard, 24, took to Twitter to announce the extension and thank the Blazers.
First-round picks from the 2012 NBA draft such as Lillard are eligible to negotiate contract extensions now through Oct. 31. But like any free-agent deal throughout the league, they can't be formally signed until July 9, when a leaguewide moratorium on player business is lifted.
Lillard, the sixth overall pick in the 2012 draft out of Weber State, has excelled in his three seasons in the league. He was named Rookie of the Year for the 2012-13 season, and followed that up with two consecutive All-Star campaigns.
Lillard has career averages of 21.0 points, 6.1 assists and 1.0 steals.
Lillard is a point guard for the new age, a ferocious competitor who can score as well as he passes and puts pressure on the defense as soon as the ball is in his hands.
Lillard teamed up with Aldridge to headline a starting five in Portland that just a year ago appeared on the brink of pushing the Blazers back into the Western Conference elite. With Lillard running things on the perimeter and Aldridge providing a big target in the post and on those devastating pick-and-pop plays designed by coach Terry Stotts, the Blazers stormed out of the gates in 2013 and beat the Houston Rockets in the first round of the playoffs on an electrifying, buzzer-beating 3-pointer from Lillard in Game 6.
But the Blazers weren't able to build on that success this season, battling injuries and losing in the first round of the playoffs to Memphis.
Starting shooting guard Wesley Matthews was lost to an Achilles injury and won't return, starting forward Nicolas Batum was traded to Charlotte. Aldridge, the previous face of the franchise, and starting center Robin Lopez are considering other offers on the open market as well.
That makes it possible, if not likely, that Lillard will be the lone returning starter in Portland next season. But he's shown in his first three seasons in the league that he's definitely worth building around. He is a two-time All-Star, won rookie of the year in 2012 and has cemented himself as one of the best point guards in a league full of very good ones.
Lillard has also been active in the community, helping out causes in Portland and at home in Oakland while regularly engaging with fans on Twitter and at the arena. He has become one of the league's most marketable personalities and has a lucrative endorsement deal with Adidas.
The Blazers also agreed to a three-year, $20 million deal with forward Ed Davis on Thursday, giving them some insurance if Aldridge chooses to leave for one of his many other suitors, including San Antonio, Phoenix, Dallas and the Lakers.
Information from The Associated Press was used in this report.