According to multiple sources, the deal is worth $108 million with $55 million guaranteed. In addition, NFL.com reported that the pact includes a $25 million signing bonus. Romo receives more guaranteed money than the six-year, $120.6 million contract that Joe Flacco recently signed with the Baltimore Ravens.
Flacco, a Super Bowl champion, got $52 million in guarantees.
The deal makes Romo the highest paid player in franchise history. Romo will earn $11.5 million this season. The paper also stated that the new deal will reduce Romo's cap hit, which was slated to be $16.8 million in 2013.
"This is a significant day in terms of securing stability for our team for the future," Cowboys owner Jerry Jones said.
"Tony is uniquely qualified to lead this team at the quarterback position for the next several years. He has an abundance of experience and familiarity with our offensive philosophy, our head coach and the personnel around him. He is moving into a period of time where he can maximize all of his natural skills while continuing to build upon the talents that he has developed since entering the NFL. He has a proven-veteran-quarterback grasp of the intellectual side of the game. He knows how to run an offense and run a team. He knows how to win games and has done it in a lot of different settings and under a lot of difficult circumstances."
The 32-year-old Romo, who has just one postseason win in nine seasons, would have become an unrestricted free agent after the 2013 season.
Last year, Romo threw for a career-high 4,903 yards to go along with 28 touchdowns and 19 interceptions. However, his passer rating of 90.5 was the lowest of his career.
Romo, who joined Dallas in 2003, has completed 2,097 passes for 25,737 yards, 177 touchdowns and 91 interceptions in 121 career games.
Romo's lone playoff win came during the 2009 season, when he had a 104.9 rating in a 34-14 win over the Philadelphia Eagles in the first round.
"I want to thank the entire Jones family for believing and trusting in me to finish my career as a Dallas Cowboy," Romo said. "There will be no greater reward, besides winning a Super Bowl, than playing my entire career as a Dallas Cowboy.
"I am excited about the year ahead and some of the changes that we have made to allow us to be a better team going forward. This is an organization that always gives us a chance to win, and that is always the main focus here. We haven't had the type of success that we have all wanted the last few years, but I do know that we are on the verge of doing that. I have been around good teams and bad teams and our team is about to take that next step with a lot of things that are taking shape around Valley Ranch. Today just further instills that and I am excited about our team and the direction we are headed."