James, who turns 36 later this month, averaged 25.3 points last season and led the NBA in assists with 10.2 per game.
This extension will take James through the 2022-23 season, giving him 20 seasons in the NBA.
James is now set to make $39.2 million in 2020-21, $41,180,544 in 2021-22 and $44,474,988 in 2022-23.
James was named the 2020 NBA Finals MVP after leading the Lakers past the Miami Heat in six games. He became the first player in NBA history to win the award with three franchises; he also was Finals MVP with the Heat in 2012 and ’13 and with the Cleveland Cavaliers in 2016.
His oldest son, Bronny, is slated to graduate high school in 2023.
ESPN’s Dave McMenamin and Bobby Marks contributed to this report.