Webb and the Ravens agreed to a five-year, $50 million extension with a $10 million signing bonus and a $5 million option bonus. The extension will begin after the 2012 season.
"It feels amazing," Webb said. "I feel blessed and proud. Now I can relax and play ball and not worry about anything. This settles my mind down."
A third-round pick by the Ravens in 2009, Webb was a restricted free agent this year and had received a first-round tender ($2.74 million).
Webb, 26, was among the biggest surprises on the Ravens' defense last season. Injuries pushed Webb into the starting lineup during training camp and he ended up being one of the top cornerbacks in the AFC North.
"Lardarius is an important player for the Ravens and we're very happy he will be with us for a long time," Ravens general manager Ozzie Newsome said. "We have a good history of completing second contracts for targeted players we want to keep for the long haul."
Last season, his first as a full-time starter, Webb recorded a career-high 68 tackles and led the team with five interceptions, tied for third-best in the AFC.
Information from The Associated Press was used in this report.