The deal is worth $36.5 million and could reach a maximum of $42.5 million, a league source told ESPN NFL Insider Adam Schefter. It includes $22.5 million guaranteed, the source said.
"We are thrilled to be able to extend Jonathan for five additional years," Panthers general manager Marty Hurney said in a statement. "He is a perfect fit for our organization. He is a playmaker who can make the difference in games and we have seen the impact he and DeAngelo Williams have had on our team."
The Panthers added fullback/tailback Mike Tolbert in free agency during the offseason, and the plan is to use him in tandem with Stewart and Williams.
Last July, Williams agreed to a five-year, $43 million deal that included $21 million in guaranteed money.
A first-round pick in 2008, Stewart is the second leading rusher in franchise history with 3,500 yards. He also holds the club record for single-game rushing yards with 206 against the New York Giants on Dec. 27, 2009.
Stewart was in the last year of his contract.
However, Hurney said trading him was never an option.
"We didn't even consider it," Hurney said. "He's a valuable player for us. All you have to do is look is look at his production. I think you look at it as if you try to add as many weapons as possible on offense, regardless of position. And Jonathan and DeAngelo have been a proven to be a solid 1-2 punch for us. They have been a proven commodity, and we wanted to make sure we didn't lose Jonathan."
Along with rushing for 761 yards and four touchdowns last season, Stewart also caught 47 passes for 413 yards receiving with three scores. He served extensively as the team's third-down back.
Stewart has run for 26 touchdowns in his four seasons.
Hurney said re-signing Stewart, a first-round draft pick in 2008, has been a priority this offseason.
"We feel like you have to keep your good players," Hurney said. "That's why we aren't active in free agency. We place an emphasis on re-signing the players we've drafted. And Jonathan is a valuable player for us."
Information from The Associated Press was used in this report.