The extension adds one more year to his previous deal and also upgrades already existing portions of his contract.
It is the second straight year in which Driver received an extension. The Packers added two years to his contract last spring.
The extension, which means that Driver's contract now runs through the 2010 season, was first reported by the Milwaukee Journal-Sentinel and was subsequently confirmed through league salary documents.
"I feel like I'm a top five receiver in the league," Driver told the Journal-Sentinel. "I've been a Green Bay Packer for life. "That's what you want from the organization, that they can see that in you. When you have an organization like that, what other organization would you rather play for? My goal is to always be here."
While the reworked contract could allow Driver to realize as much as $11 million in so-called "new money" over its length, much of that comes in the final season of the deal, and might never be paid out. Driver would be in his 12th season and 35 years old in 2010, and might no longer be with the team.
A more realistic expectation is that Driver, 32, will earn roughly $4 million in additional compensation over the next three seasons, if he stays healthy. Some of the bonus money that is included in the extension is directly tied to Driver being on the 45-player active list each week during the season.
In terms of salary, roster and workout bonuses, Driver will net raises of about $1.6 million for this season and $1 million each for the 2008 and 2009 campaigns.
An eight-year veteran, Driver has 421 career receptions for 5,929 yards and 36 touchdowns. Since moving into the starting lineup in 2002, he has averaged 76.8 catches, 1,081.8 yards and 6.6 touchdowns. Driver has notched 84 or more catches and more than 1,200 yards in each of the past three seasons. His career-best performance in 2006 -- 92 catches, 1,295 yards and eight touchdowns -- earned him a second Pro Bowl invitation.
The former Alcorn State star was a seventh-round choice in the 1999 draft. He has appeared in 114 games and started 78 contests.
Len Pasquarelli is a senior NFL writer for ESPN.com.