The deal is worth an average of $7.6 million per season, the team announced.
Byfuglien, 30, was set to be become an unrestricted free agent July 1, and the clock was ticking on the Jets to either re-sign him or trade him before the Feb. 29 trade deadline.
Byfuglien has 32 points (15 goals, 17 assists) in 52 games this season.
He was acquired from the Chicago Blackhawks in the summer of 2010 when the Jets franchise was still in Atlanta.
"I've been here five years," Byfuglien told reporters Monday. "Where we started and where we're at now, I don't feel as an organization and as a group that we're far off. We've taken the right steps.
"My family and I find Winnipeg nice, and we're very happy to stay here and sign this. ... I'm excited that I'm a Jet.''
The deal includes a full no-movement clause which kicks in immediately and runs through the first two years of the new contract, a source said. Starting in Year 3 of the new deal, the terms shift to a modified no-trade clause in which Byfuglien submits a list of teams to which he would accept a trade.
The Jets are banking on Byfuglien.
"It's an exciting time for our franchise," Jets GM Kevin Cheveldayoff told Winnipeg reporters. "It really underscores what's happening within this room right now."
The Jets' work is not done yet, as 30-year-old captain Andrew Ladd is set to become an unrestricted free agent July 1. Ladd has 13 goals and 17 assists this season.
It's not clear if the team will be able to re-sign Ladd, but he is likely to be traded before the deadline if the two sides fail to reach an agreement.