The team announced the signing Saturday. The deal is worth an average of $5.95 million per season, a source told ESPN.com's Pierre LeBrun.
Bishop, a Vezina Trophy finalist last season, went 37-14-7 with a 2.23 goals-against average in 63 games. He set team records for single-season wins and GAA.
Bishop has played in 108 games with the Lightning, Ottawa and St. Louis, going 55-31-11 with eight shutouts.
The extension runs through the 2016-17 season.
Information from The Associated Press was used in this report.