A source told ESPN NFL Insider Adam Schefter that the deal is for five years and is worth $65 million -- $39 million of which is guaranteed.
Hilton's $39 million guaranteed is nearly twice as much guaranteed money as any other player on the Colts roster. Quarterback Andrew Luck is second on the team in that category at $22.1 million, according to the Roster Management System.
"It's a great day for the Indianapolis Colts, T.Y. Hilton and his family," Colts general manager Ryan Grigson said in a statement. "We're extremely happy as an organization to ensure that T.Y. will continue to be a part of our journey for many years to come. His daily excellence on and off the field is a shining example of an individual striving for greatness and what it truly means to be a Colt."
Hilton, who is part of a talented 2012 draft class by the Colts, is coming off his first Pro Bowl appearance after posting 82 receptions for 1,345 yards last season.
According to ESPN Stats & Information, he has 17 receptions of at least 40 yards since 2012, the third most in the NFL during that time span behind DeSean Jackson (23) and A.J. Green (19). The rest of the Colts wide receivers have combined for 12 receptions of at least 40 yards since 2012.
Hilton's agent, Drew Rosenhaus, was at Anderson University on Wednesday meeting with the Colts for the third time since training camp began Aug. 1. His brother, Jason Rosenhaus, also attended the meeting.
Colts owner Jim Irsay told ESPN.com late last month that he believed the two sides could get a deal done before Labor Day.