Ellis will earn an average of $2.5 million a year for five years, a source told ESPN.com's Pierre LeBrun. He will make $1.5 million, then $2 million, then $2.5 million, then $3 million and then $3.5 million.
General manager David Poile announced the deal Thursday before the Predators' preseason home opener against Tampa Bay. The team will announce details of the contract Friday after Ellis arrives in Nashville.
Ellis, 23, was a restricted free agent who has stayed away from Nashville's training camp with new coach Peter Laviolette. Ellis played 80 games last season for the Predators and had a plus-9 rating. He also ranked third among Nashville defensemen with 27 points.
He played in his first World Championship in May and led all Canadian defensemen with five points. Ellis was Nashville's top draft pick at No. 11 overall in the 2009 entry draft.
Information from The Associated Press was used in this report.