Wolves president Flip Saunders announced the deal via Twitter, which sources told ESPN.com is a five-year pact worth $60 million and potentially up to an additional $8 million in incentive-related bonuses.
"Retaining Pek was our No. 1 priority this offseason, and we're very excited that he's chosen to continue his career in Minnesota," Saunders said. "Thanks to a lot of hard work and determination, Pek has developed into one of the NBA's premier centers and is entering the prime of his career. We envision Pek and Kevin Love being the 'Bruise Brothers' and forming one of the best frontcourts in the NBA for a long time to come."
Rival teams scarcely tried to lure Pekovic away from Minnesota this offseason, so sure that the Wolves would match any offer sheet to the bruising big man.
Saunders nonetheless established re-signing Pekovic this summer as one of his foremost priorities since succeeding David Kahn in charge of the Wolves' front office in May. Pekovic was set to reach the open market next summer as an unrestricted free agent.
Pekovic posted career highs last season by averaging 16.3 points and 8.8 rebounds in 62 games in his third NBA season.
The deal was clinched, sources say, when Minnesota offered a fifth year. Initial indications are that neither side possesses an option in the new contract, making it a straight-up deal for the next five seasons for the 27-year-old.
In addition to his low-post moves and underrated agility, Pekovic is valued by the Wolves for his work in pick-and-roll coverages defensively against the offensive sets that are so prevalent all over the league.
Pekovic has spent the summer at home in Montenegro and recently withdrew from his country's national team ahead of next month's Eurobasket tournament in Slovenia because he hadn't yet finalized his Wolves contract.