A source told ESPN's Marc Stein that the deal is for two years and $7.5 million. Both years are guaranteed.
"We've been talking about it for a while," Collison said Tuesday. "It's something I'm really happy about. I felt like this is where I wanted to be. This is my team."
Drafted 12th overall in 2003 by the Seattle SuperSonics, Collison is the longest-tenured member of the Thunder organization, playing all 11 seasons with the franchise. He signed an extension with the team in 2010 that was set to expire this summer.
"We are excited that Nick Collison will continue his tenure with the Thunder. Since our arrival in 2008, Nick has helped us establish the standards on and off the floor that we work by on a day-to-day basis," Thunder general manager Sam Presti said. "He has accepted various roles, demonstrated professionalism in all aspects of his craft, and shown a commitment to an organizational philosophy that is rare in sports today. Nick is the type of player that will always be valued in Oklahoma City, and we are thrilled he will continue to be a foundational member of the Thunder moving forward."
Added Thunder coach Scott Brooks: "He's going to go down as one of the best teammates of all time. Not just for our organization but from my experience of being on a lot of different teams as a player and a coach. He's right there with the best of them."
Collison's extension will keep him with the organization for 14 seasons, an unusual length of time for a non-All-Star player.
"There's been multiple GMs, multiple ownership groups, a lot of different players, a lot of different coaches and for me to be able to stick around is like I said, I'm fortunate," he said. "It's always worked out well. I've had fair deals and I've been appreciative of the teams that have wanted me around. It's a place I like coming to work and I've been here a long time and enjoy working with the people. There's really no need to do anything else."
Thunder star Kevin Durant saluted the Collison extension on Twitter:
Congrats Mr. Thunder, such a honor to play alongside you @nickcollison4— Kevin Durant (@KDTrey5) February 3, 2015
Collison has had seven DNP-CDs this season and has seen his minutes dip to a career-low 15.9 per game. He's averaging career lows almost across the board in points, rebounds, blocks and field goal percentage.
Still, he's consistently been one of the top players in the league in plus/minus, which measures how well the Thunder perform when he's on the floor.
"I understand that it's not about stats," Brooks said. "It's about intangibles. It's hard to put a number on it, hard to put a value on it. But when you have a guy like Nick, you know how valuable he is."
Collison, 34, is averaging 3.8 points, 3.4 rebounds and 1.2 assists in 41 games this season. He holds career averages of 6.4 points and 5.5 rebounds in 791 NBA games.