The Warriors have gone to great lengths to hold on to Thompson, refusing to include him in trade talks for Kevin Love this summer. They also rebuffed several recent inquiries for him as extension talks dragged on.
Ultimately, Golden State decided to lock up the 24-year-old guard, who teams with Stephen Curry to form one of the best backcourts in the league.
Thompson averaged 18.4 points last season, second on the team to Curry and a career high.
The Warriors had until midnight Friday to reach an agreement with Thompson, who would have become a restricted free agent next summer otherwise.
Information from ESPN.com's Ramona Shelburne was used in this report.