Tatar's deal is worth $2.75 million per year. The 23-year-old forward had 19 goals and 20 assists in 73 games in his first full season in the NHL.
Only Gustav Nyquist scored more goals for Detroit with 28.
Tatar represented Slovakia at last year's Olympics in Sochi. He was drafted by Detroit in the second round in 2009.
The contract was announced on Monday.
In 100 career games with the Red Wings, Tatar has 24 goals and 23 assists.