The deal is worth $52.5 million, according to media reports.
Kipnis, who turned 27 years old Thursday, is one of the Indians' core players. He was an All-Star for the first time last season, batting .284 with 17 homers, 84 RBIs and 30 stolen bases as the Indians returned to the playoffs for the first time since 2007.
With Kipnis' deal, the Indians have 16 players under contract through at least 2016. Among them are several key pieces, including outfielder Michael Brantley, third baseman Carlos Santana and right-hander Danny Salazar.