McCarthy, who just finished the second year of a three-year deal that he originally signed with the team in 2006, is expected to receive an average annual salary of close to $4 million. He earned about $1.5 million to $2 million per year on his recent contract.
Though many expected the deal to be announced prior to the end of the season, McCarthy casually negotiated with general manager Ted Thompson, former president Bob Harlan and new president Mark Murphy in recent days.
"I'm very pleased with the deal," said McCarthy, who spoke to reporters via teleconference from the Pro Bowl in Honolulu. "I think it's an outstanding commitment from the organization. I have no interest in being an agent. The process of doing it myself is something I was very comfortable doing because of the Green Bay Packers. I didn't want to go through the agent process. ... Sometimes it can get to a situation where it gets drawn out and things happen that don't need to happen. It was a very mutual understanding on the contract. I'm very thankful for Bob Harlan, Mark Murphy and Ted Thompson ... everybody involved for this opportunity."
At the time of his hiring in early January of 2006, McCarthy was the youngest coach in the NFL at 42 years old. Oakland's Lane Kiffin, 32, has taken over that honor, but is far from turning the Raiders around like McCarthy has the Packers.
In just his second season in Green Bay, McCarthy has reinvigorated Brett Favre's game and turned the Packers into a Super Bowl contender.
"We have accomplished some of our goals over the past two seasons, but there remains much left to be done. I am excited by the opportunity to meet those challenges and someday return another Lombardi Trophy home to Green Bay."
McCarthy, the franchise's 14th Head Coach, recently completed one of the most successful seasons in club history. The 2007 Green Bay Packers tied a franchise record with 13 regular-season wins, then whipped the Seattle Seahawks in a NFC Divisional playoff before falling to the New York Giants in overtime in the NFC Championship Game at Lambeau Field.
McCarthy became the first Packers coach since Vince Lombardi to take his team to a championship game in his second season. For his efforts, he was honored by the NFL Alumni and Motorola as the 2007 NFL Coach of the Year.
"We are pleased to be able to make this announcement," Thompson said. "Mike brings tremendous passion, work ethic and structure to his position. These are the traits we saw in him when he was hired and we're very happy for the success we have had under his guidance.
"Mike and I have a very good working relationship and we look forward to continuing to work for such a special organization with such great fans."
In early January, Thompson was rewarded with a five-year contract extension for quietly rebuilding the Packers in the last three years.