The Islanders used a compliance buyout Wednesday to remove the final eight years of the goalie's deal from the club's salary cap.
New York will pay the 31-year-old DiPietro $1.5 million for each of the next 16 years -- double the years left on his original 15-year pact with the Islanders.
The No. 1 pick in the 2000 draft, DiPietro has been limited to 50 NHL games since the 2008-09 season, plagued by multiple concussions and hip and knee injuries that required surgery.
In 318 career NHL games, all with the Islanders, DiPietro went 130-136-8-28. Only Billy Smith played more games in goal for New York. DiPietro was 2-7 in 10 career playoff appearances.
"It was an extremely tough decision to use the compliance buyout on Rick's contract," general manager Garth Snow said in a statement. "His drive to win games and compete at the highest level for the New York Islanders was never questioned. With Rick back at 100 percent health, we wish him nothing but the best as he continues to pursue his career."
Last season, DiPietro -- the first goalie ever chosen No. 1 in the NHL draft -- played in only three games with the Islanders before he was waived and sent to Bridgeport of the AHL.
DiPietro allowed 12 goals in his Islanders appearances and didn't earn a win. In 18 games with Bridgeport, he went 9-9-0 with a 2.93 goals against average and .893 save percentage.
DiPietro signed a 15-year, $67.5 million deal before the 2006-07 season, but he was never able to live up to the contract or his lofty status of being a No. 1 draft pick.
He played 62 games that season and 63 more the following campaign, winning a total of 42 games in that span. Since then, he has made double-digit NHL appearances only once, 26 games in the 2010-11 season.