The extension is worth $3.6 million, with the the 23-year-old forward making $1.5 million in the first year of the deal and $2.1 million in the second, a source told ESPN The Magazine's E.J. Hradek.
The 23-year-old Hanzal, one of the NHL's biggest players at 6-foot-6 and 228 pounds, had 11 goals, 22 assists and 104 penalty minutes in 81 regular-season games last season. He added three assists in seven playoff games.
"We are happy to have re-signed Marty and have him in Phoenix for the start of training camp next week," Coyotes general manager Don Maloney said. "He is an important player for us who plays critical minutes against the best opposing forwards."
Selected 17th overall in the 2005 draft, Hanzal has 30 goals, 69 assists and 172 penalty minutes in 227 career games with Phoenix.
Information from The Associated Press was used in this report.