The new deal is for $115 million, sources told ESPN's Adam Schefter and Adam Caplan. Sources told Caplan that Dalton will make $22 million within the first six months of the deal based on bonuses (signing, roster and workout) and base salary.
The Bengals announced the extension Monday without disclosing financial terms.
Dalton had one year remaining on his rookie contract and was scheduled to make slightly less than $1.7 million.
Dalton told ESPN.com after practice Monday that he first learned the deal was final when his agent, Jeff Nalley, contacted him Sunday. The magnitude of the deal didn't register until just before he signed his contract papers Monday.
"It was nice knowing that everything was agreed to, but it didn't hit me until I was walking out of the [quarterbacks] meeting and saw that 'OK, now it's out, and now we're starting the process and I'm going to sit in front of them and I'm actually going to sign,'" Dalton said. "Money aside, knowing that I'm going to be here and with my family -- we're in the process of making this a home -- it's all really big."
The news of the extension capped what had already been a good weekend for Dalton. On Saturday, offensive coordinator Hue Jackson said Dalton's play during training camp has been "sensational."
"I've been very pleased with where he is and where he's headed," Jackson said. "It's our whole football team.
"I've been impressed with him since I've gotten to be the coordinator, but I've been really impressed with him over the last couple of days, because I think he's really starting to buy in to the urgency, getting the ball out of his hands and making great decisions. That was a great throwaway when we were backed up. There were times in the past the ball might have gone someplace else."
Jay Gruden, Dalton's former offensive coordinator, also was happy for the quarterback.
"I'm very happy for him. Much deserved," said Gruden, now head coach of the Washington Redskins. "He's won a lot of games in Cincinnati and the future is very bright for him and the Bengals. I'm very proud of the fact that I was part of bringing him to Cincinnati and I'm glad he got a good deal. He's got a great family, works hard and is a heck of a person."
Bengals executive vice president Katie Blackburn said the team wanted to get the extension drawn up in March when the new league season formally began. She told ESPN.com that Dalton's performance to this point in training camp had no bearing on the deal but that it was a sign the Bengals were wise to get it done now.
"To Andy's credit, he's done everything just the way you wanted him to from the day he got here," Blackburn said.
The Bengals are still waiting for Dalton to be sensational during the postseason, however, when he is 0-3 as a starter.
Dalton, who has thrown for more than 3,000 yards in all three of his seasons, has guided the Bengals to a 30-18 mark during the regular season and three straight trips to the playoffs. His career QBR during the regular season is 51.5; it is 18.1 in postseason play.