The contract is the richest in Chiefs history and the richest for a linebacker in NFL history.
The Chiefs announced the signing Wednesday but did not release terms of the deal. The sides had faced a 4 p.m. ET deadline to reach a multiyear contract after Kansas City had designated Houston as its franchise player in March.
The deal makes Houston the second-highest-paid defensive player in the NFL, in terms of guaranteed money. Miami Dolphins tackle Ndamukong Suh ranks first after signing a six-year, $114 million contract that includes $59.95 million guaranteed earlier this offseason.
"They told me at the end of the season to be patient and we'll get a deal done, just be patient and just wait, and time will take care of it," Houston said during a conference call Wednesday. "That's what I did. I sat back and waited for them."
Added Chiefs general manager John Dorsey: "In situations like this, you have to have a degree of patience. What's good is it kicks off a very positive attitude for training camp.''
Houston, 26, led the NFL in sacks last season with 22. He was a half-sack short of the single-season record set by Michael Strahan of the New York Giants in 2001.
The sides were nowhere close to agreement on a long-term contract in March, when the Chiefs designated Houston as their franchise player. In doing so, the Chiefs were obligated to offer Houston a one-year contract worth about $13.2 million.
Houston never signed that contract. Instead, he skipped all of the Chiefs' offseason conditioning and practice sessions; he said Wednesday he probably would not have shown up for training camp had a new deal not been struck.
If the sides hadn't reached a deal by Wednesday at 4 p.m. ET, they would have been prohibited by NFL rules from agreeing to a long-term deal until after the 2015 season was finished.
Houston said he always wanted to stay in Kansas City.
"To me it was very important," he said. "I like Coach [Andy] Reid a lot. He's a great coach. He's helped motivate me and pushed me to become a better player. Anytime you get around that kind of coach, you love playing for him."
The Chiefs were equally happy to sign Houston long term.
"Justin is a great football player," Dorsey said. "We've said all along if you can retain your own great football players, that helps you sustain [success]. He's young enough where he's going to have many great years with the Kansas City Chiefs organization."
Added Reid via team statement: "Justin has a relentless work ethic on the field and in the classroom, and he provides our team with tremendous leadership. He is a fearless competitor, and we are glad he is going to be back."
Houston was considered one of the top linebackers in the draft coming out of Georgia, but a failed test for marijuana at the NFL scouting combine caused his stock to slide. The Chiefs wound up taking him in the third round.
He has only made roughly $3 million over the course of his rookie contract. For that small price, Kansas City got 200 tackles, 48 1/2 sacks and five fumble recoveries.
Information from The Associated Press was used in this report.