General manager Mickey Loomis announced the deal Wednesday. Colston was scheduled to make $445,000 this season from his rookie contract. He was planning on playing out the season at that number but had hoped for a new deal.
That deal came together on the opening day of Saints training camp. Terms of the deal weren't immediately available.
"It's really a tribute to how well Marques has done for us coming from Hofstra and being a seventh-round pick," Loomis said. "Clearly, he's been very productive, a nice surprise and a great story for us."
Colston, who at 6-foot-5, 225 pounds provides quarterback Drew Brees a big target, surprisingly emerged as one of Brees' favorite receivers during training camp in 2006. He went on to compile 2,241 yards receiving for 19 touchdowns in his first two seasons.
A Hofstra product, Colston has surpassed 1,000 yards receiving in each of his first two seasons. Last season, he caught 98 passes for 1,202 yards and 11 touchdowns.
"He brings a level of consistency and he knows what to do," Saints coach Sean Payton said. "He's been reliable and there is a high amount of confidence in him from our quarterback."
Loomis said the hope is the relatively short length of the deal would reduce the likelihood of Colston coming back and demanding another raise before his latest contract was up.
The deal also means Colston, recently acquired tight end Jeremy Shockey, running back Reggie Bush and Brees all are under contract through the 2011 season.
In other Saints news, the team agreed to terms with fifth-round draft choice Carl Nicks on Wednesday, leaving only top pick Sedrick Ellis and second-round choice Tracy Porter unsigned on the eve of training camp.
Senior writer John Clayton covers the NFL for ESPN.com. Information from The Associated Press was used in this report.