The deal will count $566,700 per season against the NHL salary cap.
The 28-year-old Engelland, in his first full NHL season, has developed into one of the league's top fighters. He also has two goals and three assists and a team-high 76 penalty minutes in 32 games after playing the previous three seasons in the AHL.
The Penguins have seven defensemen under contract for next season: Alex Goligoski, Ben Lovejoy, Brooks Orpik, Kris Letang, Paul Martin, Zbynek Michalek and Engelland. All but Goligoski (2011-12) and Lovejoy (2012-13) are signed through at least the 2013-14 season.