The extension is for six years and is worth $92 million, a source told ESPN.com. About $38 million to $39 million is guaranteed. More importantly, the deal will keep Rivers off the free-agent market next spring, and will preclude the Chargers from having to exercise a franchise designation to retain him.
The agreement comes amid reports that the Chargers would have a difficult time reaching an extension accord with Rivers, a first-round choice in the 2004 draft.
But the negotiating climate turned during the weekend, and keeping Rivers for the long term is a coup for general manager A.J. Smith, who has done an exemplary job in keeping the nucleus of his roster intact with contract extensions.
Rivers said he was "thankful to have many more opportunities to suit up and go out there and be the quarterback for the Chargers and short-term, to be able to just do all I can to lead us to a championship."
It is not yet known what altered the tenor of the contract discussions, but it's believed that Rivers became personally involved in the talks.
"This is a great day for the Chargers and Chargers fans," team president Dean Spanos said. "Philip has proven he has all of the necessary qualities to be a successful quarterback in the NFL. He's a proven winner and an unquestioned leader for this football team."
Without the deal, Rivers would have been eligible for unrestricted free agency next spring, regardless of whether the league and players' union had an extension of the collective bargaining agreement.
San Diego almost certainly would have retained Rivers by naming him a franchise player, but at a cost believed to be about $16 million for a one-year tender.
Rivers, 27, was entering the final year of the six-year, $40.5 million rookie contract he signed in 2004 after a lengthy and sometimes acrimonious negotiation.
After sitting behind Drew Brees his first two seasons in the NFL, Rivers became the San Diego starter in 2006, when Brees departed for New Orleans as a free agent.
Rivers has started all 16 games in each of the past three seasons, and the former North Carolina State star is coming off a career year in which he led the league in passer rating (105.5) and touchdown passes (34), and was fourth in the NFL in passing yardage (4,009 yards). He completed 312 of 478 attempts last season, with only 11 interceptions.
In his career, Rivers has completed 890 of 1,428 passes for 10,697 yards, with 78 touchdown passes, 36 interceptions, and a passer rating of 92.9. Most of that production has come in the past three seasons, with Rivers seeing only limited action in 2004 and 2005.
Rivers was the fourth overall choice in the 2004 draft, selected by the New York Giants. Within an hour of that choice, however, he was traded to San Diego for quarterback Eli Manning, the first pick in that year's lottery. Manning recently signed a six-year, $97.5 million extension to his deal.
An extremely accurate passer despite a somewhat unconventional delivery, Rivers has emerged as a leader for the Chargers, whom many believe possess the most talented roster in the league.
"I don't think there can be any more pressure added, commitment added, determination from my side or from anybody in that locker room to want to go win a championship," Rivers said. "There's no outside or monetary driving force that can make me want to win any worse than I do. I've always hated losing and don't know if I can hate it any more, so there's really nothing that can give me any extra drive."
He has solidified his standing with his teammates because of his toughness and ability to play through pain.
Two years ago, Rivers played in the AFC Championship Game at New England despite a knee injury that kept him out of practice for much of the pregame preparations.
It was subsequently revealed that Rivers played with a damaged anterior cruciate ligament that later required surgery.
"He's a good dude, man, and I'm happy for him and I'm happy that he's here long-term," said tight end Antonio Gates, whose locker is next to Rivers'.
Gates said the Chargers had fun kidding Rivers at practice about his big deal, but knows the money won't change him.
"At the end of the day I know what it means for him to go out here and play football and know the passion he has for us to win," Gates said. "I think that's the biggest thing about him. The thing I'm going to remember when I'm done playing ain't going to be the big contracts, it ain't going to be the money, it ain't going to be the cars. It's going to be the person I had the chance to sit next to."
Len Pasquarelli is a senior NFL writer for ESPN.com. Information from The Associated Press was used in this report.