The deal is worth $96 million, including $45 million in guaranteed money, a league source told ESPN NFL Insider Adam Schefter.
Tannehill initially was under contract through the 2016 season after the Dolphins picked up his fifth-year option this offseason.
Tannehill thrived last season in his first year under offensive coordinator Bill Lazor, completing 66.4 percent of his passes for 4,045 yards, 27 touchdowns, 12 interceptions and a 92.8 passer rating.
"We are thrilled that we were able to sign Ryan to an extension," Dolphins vice president Mike Tannenbaum said in a statement. "He is an ascending talent, a team leader and checks all of the boxes you are looking for at the position."
The Dolphins view Tannehill as a player with upside; his passer rating, completion percentage and yards have increased in all three seasons.
"Signing Ryan to this deal is important to our franchise," Dolphins general manager Dennis Hickey said. "He is a proven quarterback in this league that combines a talented skill set with work ethic, passion, toughness and a team-first mentality.
"We are committed and believe in Ryan as our quarterback for the long term and we are excited to be able to sign him to this extension."
Tannehill will be working with a mostly new group of receivers this season. The Dolphins made major changes at the position this offseason by trading veteran Mike Wallace, cutting Brandon Gibson and letting Brian Hartline leave in free agency. Miami acquired receiver Kenny Stills in a trade with the New Orleans Saints, signed veteran Greg Jennings and drafted rookie DeVante Parker in the first round.
The 26-year-old Tannehill was Miami's first-round draft selection -- the eighth overall pick -- in 2012 and has started all 48 games in the past three seasons. Miami has gone 23-25 in those games.
The Associated Press contributed to this report.