The five-year extension is worth $110 million and incentives can boost it to $111.25 million, sources told ESPN's Adam Schefter.
With the year he had left on his deal, Chubb is now contractually tied to the Dolphins for six years and $119 million.
Dolphins GM Chris Grier, vice president Brandon Shore and Chubb's agent Erik Burkhardt of Roc Nation Sports did the deal in the past two days, per sources.
The Broncos traded Chubb to the Dolphins on Tuesday for a package that included the 2023 first-round pick that Miami acquired from the San Francisco 49ers last year. The Dolphins also sent running back Chase Edmonds and a 2024 fourth-round pick to Denver for a 2025 fifth-round selection.
Chubb, 26, was in the final year of the rookie contract he signed in 2018, but Grier made it clear Wednesday that Miami did not part ways with a first-round pick for a one-year rental.
"When you do a deal like that for a player, you always would like to -- from our perspective when we do business -- we would like to have something done, and we anticipate having something finished up here shortly," he said Wednesday.
The 2020 Pro Bowler has recorded 5.5 sacks this season and ranks third in the NFL with a 25.8% pass rush win rate; his new teammate, Jaelan Phillips, ranks fourth.
Chubb's career has been marred by injuries over the past three seasons. He has missed 24 out of 49 possible games entering 2022, mainly because of a torn ACL and a bone spur in his ankle. Grier said the Dolphins did extensive research into his injury history and work ethic and determined there was no major cause for concern.
Over the next two seasons, the Dolphins will have to make decisions on several key players, such as Christian Wilkins, Andrew Van Ginkel, Nik Needham and Tua Tagovailoa, while also issuing $17 million or more to four players not including Chubb -- Tyreek Hill, Terron Armstead, Byron Jones and Emmanuel Ogbah.
Information from ESPN's Marcel Louis-Jacques was used in this report.