The deal comes a day before the Chargers open training camp and keeps Herbert, 25, under contract in Los Angeles through the 2029 season. The deal includes a no-trade clause, $133.7 million in full guarantees and $193.7 million in injury guarantees.
The team announced a multiyear extension for its franchise quarterback but did not disclose specific terms.
Herbert becomes the third quarterback this year to agree to a blockbuster extension following new deals between the Philadelphia Eagles and Jalen Hurts (five years, $255 million) and the Baltimore Ravens and Lamar Jackson (five years, $260 million).
Herbert's deal makes him the highest-paid quarterback in NFL history based on average annual value ($52.5 million). It also sets the playing field for the Cincinnati Bengals and star quarterback Joe Burrow, who remain in talks on an extension.
"I sleep better at night knowing we have a franchise quarterback," Chargers general manager Tom Telesco said at the end of last season. "He's done so much already in his young career, yet we all know there's still a lot there because of his commitment to the game."
Herbert has surpassed several significant statistical NFL milestones since he was selected with the sixth overall pick in 2020. Last season, he led the Chargers to their first playoff appearance since 2018.
In three seasons, Herbert is 25-24, with one playoff loss. He has passed for 14,089 yards, besting Andrew Luck for the most through a quarterback's first three NFL seasons. He has completed 1,316 career passes, which also are the most in league history through a player's first three seasons. His 64 Total QBR ranks fourth in the NFL since his rookie season in 2020.
Herbert has thrown 94 career touchdowns, recording three consecutive seasons with at least 25 passing touchdowns -- putting his name alongside Hall of Famer Peyton Manning as the only quarterbacks to do so at the outset of their careers.
Despite two seasons remaining on his rookie deal, the Chargers opened negotiations with Herbert on a long-term extension shortly after the 2022 season when he became eligible.
Earlier this offseason at the NFL annual league meeting in Phoenix, coach Brandon Staley expressed confidence that Herbert would remain with the team for "a long time."
"We're so excited that he is leading our franchise," Staley said.
The Chargers' ability to strike a deal with Herbert before opening training camp ensures that the organization not only has its most important player under contract into the foreseeable future but also allows the team to focus on earning a repeat postseason appearance, something it has not accomplished since making four consecutive playoff appearances from 2006 to 2009.
This season, Herbert will be under the direction of new offensive coordinator Kellen Moore, who joined the Chargers after four seasons in the same role with the Dallas Cowboys, where his unit ranked in the top four in points per game (27.7), yards per game (391) and third-down conversion percentage (44%).
Herbert also will have at his disposal a plethora of playmakers, including wide receivers Keenan Allen and Mike Williams, first-round pick Quentin Johnston and running back Austin Ekeler, who last season led the NFL with 18 total touchdowns.
Herbert was scheduled to earn $4.23 million in the fourth season of his rookie contract.