The terms of the deal are not yet known. The university's board of trustees must give final approval to make the new contract official.
The move to lock up Williams for additional years is happening after the NCAA charged North Carolina with five Level I violations stemming from the university's long-running academic fraud scandal. Williams was not named in the broad-based allegations, nor was any other Tar Heels coach, although the NCAA did cite a lack of institutional control for poor oversight of an academic department popular with athletes and the counselors who advised them.
"Everyone who loves Carolina is truly saddened by these allegations," Williams said Thursday in a statement released by the school. "We aspire to and work toward meeting higher standards than the actions that warranted this notice. Our university and numerous outside groups have looked at every aspect of our academic and athletic life. As a result, Carolina has implemented scores of new processes and checks and balances that have undoubtedly made us a better university. Hopefully, we will never again receive such a notice."
The NCAA and UNC are at odds over what rule violations were committed, meaning there's still a long road to resolution in a nearly 4-year-old case.
"We'll do everything we can do to make it go as quickly as possible, but we'll take the time to do it thoughtfully," UNC chancellor Carol Folt said Friday. "But I think we all know that we will get to the end of this process. And I'm very anxious for that to take place because while this has been going on for all these years, we've been doing so many other things."
UNC must now file its response, which includes whether it agrees with the charge level and whether the facts are "substantially correct." Athletic director Bubba Cunningham said Thursday that "some [allegations] I agreed with, some I did not" on his first read.
"To do a thorough review, it does take time," Cunningham said. "There's a lot of data to review, and the reviews go back quite some time. But I will also concur that it has been a difficult environment on the campus for us ... and I do think the length of time has impacted our ability to attract some of the students that would have committed to the institution in previous years."
Williams had three years remaining on his previous contract, according to ESPN.com's Jeff Goodman. Schools typically want to have their coaches locked up for at least four years because it aids the recruiting process. Prospective student-athletes generally want to be assured that their future coach plans to remain for the duration of the players' collegiate eligibility.
North Carolina is allowed 90 days to respond to the NCAA. That is when the school would self-impose penalties if it decided to do so.
The Associated Press contributed to this report.