The six-year deal includes $16.5 million guaranteed. There is a $10 million option -- if exercised by the Patriots in 2015 -- that would extend the deal through '19.
It is a stunning move by the team for a player entering just his third NFL season, but the Patriots recognized the game-breaking skills of the record-setting Gronkowski.
"This is a rare deal," said Drew Rosenhaus, Gronkowski's agent. "Thanks to Mr. Kraft and coach Belichick."
ESPN NFL Insider Adam Schefter reported the deal earlier Friday.
Gronkowski last season set a league record for the position with 17 touchdown catches. He also had a record 1,327 yards, and made 90 receptions.
Gronkowski is coming off left ankle surgery, an injury that slowed him in New England's loss to the New York Giants in the Super Bowl.
"He broke every record last year and it's just a remarkable story," Gronkowski's father, Gord, said Friday. "And you know, there in Arizona, we didn't know if he was going to play anymore when he had his back surgery [in college]. And now, it's a great story. He's out there now and everything's well and he's ripping it up."
Gronkowski, selected in the second round of the 2010 draft, had two more years left on his contract. But New England tore it up, or rather added on to his rookie deal so Gronkowski could be with the team through the 2019 season.
The 23-year-old Gronkowski was virtually uncoverable while healthy last season. He combined with fellow second-year tight end Aaron Hernandez and slot receiver Wes Welker -- the league's leading pass-catcher -- to help New England go 13-3 and score an AFC-high 513 points.
Gord Gronkowski said the big money won't change his son in the least.
"No, Rob is Rob. He still to this day will wear jeans that he had in high school, and shirts that he had in high school," he said. "We're not flashy people. And that's Rob all the way. The money, it's nice, don't get me wrong, but it will not change him. Rob will always be Rob the goofball."
Information from The Associated Press was used in this report.