The deal, first reported by TNT, begins in 2019, the source said. It includes a fourth-year player option and a 15 percent trade kicker.
In a video tweeted Friday night by the UNINTERRUPTED, Wall confirmed he had agreed to the extension, saying: "You know I wasn't going anywhere."
Wall, 26, has two years and $37 million left on his current deal.
ESPN reported June 30 that the Wizards had offered Wall a supermax deal, made possible because he was named to the All-NBA third team this past season. If Wall did not make one of the three All-NBA teams next season, he could have lost his chance for the megadeal.
"I just had to think it out with my family and friends and make a decision," Wall said in the UNINTERRUPTED video. "Y'all know where I wanted to be at. I'm happy I'm coming back another four years to be a Washington Wizard. Y'all know what I'm going for. Definitely gonna bring y'all the championship, that's my ultimate goal, and I won't stop till I get it."
Already this offseason, Washington brought back Otto Porter Jr., matching a $106 million, four-year offer sheet he signed with the Brooklyn Nets. The move kept Washington's young trio of Wall, Porter and Bradley Beal intact.
Beal signed a five-year deal worth approximately $128 million last offseason. He reacted to his teammate's rich extension late Friday night, to Wall's approval.
Earlier this week, Wizards owner Ted Leonsis said he was confident Wall would sign the extension, and Leonsis added he would do what it takes to keep Washington as a contender. Including Wall's new deal, the guaranteed salaries on Washington's roster the next four seasons total: $126 million, $126M, $108M and $98M.
"I think we've proven that we have as much resources and as much tools as anybody in the league, and we're in the [luxury] tax," Leonsis told The Washington Post. "We'll spend whatever we need to get better, but we're going to get better by keeping our core together and then adding to it."
Washington went 49-33 this past season, losing to the Boston Celtics in seven games in the Eastern Conference semifinals.
Wall starred throughout, averaging 27.2 points and 10.3 assists in 13 playoff games. The only other player in NBA history to average at least 25 points and 10 assists while playing at least 10 games in a single postseason is Russell Westbrook, who posted averages of 26.0 points and 11.0 assists in 18 games during the 2016 postseason.
Wall also is the only player to average at least 15 points and 10 assists in each of the past three seasons. Westbrook (twice), James Harden and Chris Paul are the only other players to do so even once in that span.
Wall is the third player to agree this summer to a supermax deal, joining Harden and Stephen Curry.
The Designated Player Veteran Extension numbers for the Wizards John Wall would mirror that of the Rockets James Harden. The four year breakdown would be: $37.8M, $40.8M, $43.8M and $46.8M. The first year would start in 2019-20 and is based on a $108M salary cap. The total dollars of the current contract (2 years) and extension (4 years) is $206.5M.