Edmonton has not disclosed financial terms of the extension, but according to TSN and ESPN's Craig Custance, the deal is worth $12.5 million.
"It's extremely exciting for me and my family," Talbot said. "It's an exciting time in Edmonton, and I'm just happy that I'm going to be around for the next three years to grow and improve with this team."
The Oilers announced the extension Sunday, one day after Talbot made 31 saves in Edmonton's 2-1 shootout victory over the Calgary Flames.
Talbot, 28, is 8-13-3 with a 2.58 goals-against average and a .914 save percentage in 26 games this season, his first with the Oilers.