On Thursday, ESPN's Marc Stein reported Varejao and the Cavs were nearing a three-year extension worth $30 million, which would begin with the 2015-16 season.
Yahoo Sports' Adrian Wojnarowski reports that the first two years of the deal are guaranteed and worth $20 million total. The third year, worth $10 million, is a team option.
"Anderson represents how this franchise wants to approach the game of basketball, both on the court and off," said general manager David Griffin. "He has been a key part of our foundation for years and we are very happy that he will continue to be part of our Cavs family as we work towards our goals at the highest level."
Varejao averaged 8.4 points, 9.7 rebounds and 2.2 assists in 65 games last season. He has spent his entire career with the Cavs after being traded to Cleveland by the Orlando Magic shortly after being drafted in 2004.
He started at center in the Cavaliers' season opener Thursday night, scoring 10 points on 4-of-5 shooting and grabbing four rebounds in a loss to the Knicks.
Cleveland (0-1) plays the Chicago Bulls (1-0) on Friday.
- Molly Geary