Green, a restricted free agent, will earn $6 million in 2012-13 and 2013-14, and $6.25 million in 2014-15.
"Mike is one of the best young defensemen in the National Hockey League and is just entering his prime," McPhee said in a news release. "He will continue to be a key part of our team moving forward."
Green, 26, earned $5 million in each of the past three seasons.
He missed much of the past two seasons because of injuries. He had a career-high 76 points (19 goals, 57 assists) in 2009-10, but played in only 49 games in 2010-11 because of a concussion and a groin injury.
Last season, he had seven points (three goals, four assists) and was a plus-5 in 32 games. He was sidelined at first by a lingering groin issue, then had abdominal surgery in January.