His contract carries an $8.5 million average annual value against the salary cap, as first reported by Sportsnet.
Horvat was in the final season of a six-year contract that carried a cap hit of $5.5 million and was scheduled to become an unrestricted free agent this summer. He was acquired by the Islanders on Monday for a conditional first-round draft pick in 2023, forward Anthony Beauvillier and prospect Aatu Raty.
Horvat will have a new contract with the Islanders before he has technically played as a member of the team. His last regular-season game was Vancouver's win over the Columbus Blue Jackets on Jan. 27.
He was selected to the NHL All-Star Game and played for the Pacific Division team on Saturday in South Florida, but he represented the Islanders throughout the event, wearing their jersey during Friday's skills competition. The center is expected to make his regular-season debut for New York on Monday when they visit the Philadelphia Flyers.
Horvat, 27, had 31 goals and 23 assists in 49 games this season with the Canucks.
Islanders general manager Lou Lamoriello was confident the team would be able to extend Horvat when the trade was completed.
"Whenever you make a transaction like this, you make it for a player that has character," Lamoriello said. "That knows what a team gives up. And certainly feels comfortable in the organization he's in. All of that, he'll recognize quickly, and hopefully we'll get that done."
Horvat said at the All-Star Game that the trade "really hadn't sunken in" yet.
"I'm so nervous. Really, I am. It's a city I don't know a ton about yet. Meeting all the new players, getting used to the new systems, the culture there ... it's really nerve-wracking. I've never been traded before," Horvat said.
Horvat is in his ninth NHL season, having been selected ninth overall by the Canucks in the 2013 NHL draft. In 621 games, he has 201 goals and 219 assists for 420 points. He served as the team captain of the Canucks for the past four seasons.
ESPN's Kristen Shilton contributed to this report.