The Hurricanes announced the deal Thursday, exactly a year after that they acquired the 22-year-old Teravainen in a trade with Chicago. He will earn $2.86 million in the 2017-18 and 2018-19 seasons.
Teravainen had 15 goals and 27 assists in 81 games last season, all career highs. He was also second among Hurricanes skaters with 15 power-play points.
In a statement, Carolina general manager and executive vice president Ron Francis said Teravainen is "an important part of what we are building here."
The Hurricanes also announced that assistant general manager Mike Vellucci will coach the Charlotte Checkers, the team's American Hockey League affiliate.