The team did not disclose terms of the deal, but sources told ESPN's Ramona Shelburne and Chris Broussard that the new contract is potentially worth $85.7 million over the next three seasons. The deal includes a player option that would allow Westbrook to still become a free agent after the 2017-18 season.
"There's nowhere else I would rather be than Oklahoma City," Westbrook said at a news conference to announce the deal. "You guys have basically raised me. I've been here since I was 18, 19 years old. You guys did nothing but great things for me. Through the good and the bad, you guys supported me through it all, and I appreciate it. Definitely when I had the opportunity to be able to be loyal to you guys, that's the No. 1 option. Loyalty is something that I stand by."
Asked why he agreed to the extension now rather than wait until next season, Westbrook was emphatic: "There's no need to wait if you know where you want to be."
Talks between the sides centered around the addition of two more years to Westbrook's current deal, which expires after the 2016-17 season. The new deal calls for Westbrook's salary to jump from $17.8 million next season to the maximum $26.5 million. He would then earn the max the next two seasons if he exercises the third-year option.
The player option for the third season of the deal will allow Westbrook to capitalize on the league rule allowing players who have completed 10 seasons to earn a larger max salary.
In the wake of Durant leaving, the Thunder made locking up Westbrook to a long-term deal their primary offseason objective. Oklahoma City removed its qualifying offer to restricted free agent Dion Waiters to free up cap space to offer Westbrook a max extension. Waiters agreed to a deal with the Miami Heat last month.
Westbrook said he found out about Durant's departure through social media. Asked if Durant choosing the Warriors made it sting more, Westbrook responded, "Sting for who?"
"With Kevin going it opened up a few things for me," he said. "For me, just being able to see the team we have, the guys we have ... I felt like this is the best place for me and the best team. I love being here, and this is the place I wanted to be."
In a statement released Thursday, Thunder chairman Clayton I. Bennett said: "On behalf of the Thunder organization and the entire State of Oklahoma I want to congratulate Russ and offer my sincere appreciation for not only his profound presence and skill as a player, but for his high character, personal integrity and extraordinary leadership. We are thrilled he will continue with us and we look forward to exciting days ahead for the Oklahoma City Thunder."
Enthusiasm for Westbrook's signing extended to the Oklahoma City city hall, with mayor Mick Cornett proclaiming Thursday Russell Westbrook Day.
— Mick Cornett (@MickCornett) August 4, 2016
Westbrook excelled in 2015-16, tying Hall of Famer Magic Johnson for the most triple-doubles in the past 30 years with a league-high 18, including seven in the month of March.
A five-time All-Star and two-time All-Star Game MVP, Westbrook averaged 23.5 points, 7.8 rebounds and 10.4 assists last season and finished fourth in the MVP voting.
"Russell has been an outstanding leader of this team since he was drafted by our organization eight years ago. His competitiveness, character and unique athletic ability have propelled him to the forefront of the game," Thunder general manager Sam Presti said. "Russell personifies many of the traits that are synonymous with Oklahoma and Oklahomans. We are excited that Russell has chosen to continue to build the legacy of the Thunder with us as we move forward together."
Information from ESPN's Chris Broussard and Ramona Shelburne was used in this report.