Butler is extending off of his $36 million salary for the 2021-22 season and holds a player option for $37.6 million in the 2022-23 season.
The deal will keep him under contract through the 2025-26 season.
"Jimmy is the anchor and face of our franchise along with Bam [Adebayo] and Kyle [Lowry]," Heat president Pat Riley said in a statement. "With Jimmy, we get an All-NBA player, an All-NBA Defensive player, tough as nails and a complete player across the board. He's very deserving of this contract as he continually puts himself at the top of the league at his position. Having him in the HEAT organization has been a great, great coup for us."
Butler, 31, is a centerpiece of Miami's reshaped roster that will try to return to the NBA Finals for the second time in three years next season.
After Chicago hesitated on offering him a max contract, Butler was traded to Minnesota and then to Philadelphia. The 76ers ultimately worked a sign-and-trade to deliver him to Miami two years ago. Butler will have now had seven years and $287 million guaranteed to him with the Heat.
Butler was instrumental in recruiting his close friend Kyle Lowry to Miami this summer. Lowry is signing a three-year, nearly $90 million deal to partner with Butler, All-Star center Bam Adebayo and Duncan Robinson.
Butler, a five-time All-Star, has made third-team All-NBA in each of his two seasons with the Heat since arriving from the 76ers. He averaged 21.5 points and career highs in rebounds (6.9) and assists (7.1) last season. Butler made the NBA's second-team All-Defense for the fifth time in his career in 2021.
In his 10 years in the NBA, Butler has averaged 17.4 points, 5.2 rebounds and 4.0 assists.