Pavelec's new deal is for five years and worth an average of $3.9 million annually, according to an NHL source.
The 24-year-old Czech had been headed to restricted free agency this summer. He made $1.3 million last season.
This summer, rumors circulated that Pavelec had a deal to play in Russia and then the Jets traded for the rights to former Toronto goalie Jonas Gustavsson, which further fueled questions about Pavelec's future.
In spending nearly $20 million on the skilled goalie, Winnipeg general manager Kevin Cheveldayoff has shown a considerable commitment to a player who still remains more about potential than production.
Last year Pavelec was 29-28-9 with a 2.91 goals against average and .906 save percentage but showed signs that he's capable of carrying the Jets, including the month of December where he finished 7-3-1 with a 1.95 goals against average and .939 save percentage.
The former second-round pick is 70-79-25 in 187 career games with a career goals against average of 2.99 and save percentage of .907.
Jets backup Chris Mason is eligible to become an unrestricted free agent on July 1. But he says he wants back with the team.
Information from The Associated Press was used in this report.