Datsyuk, 28, leads the Wings with 27 goals and 60 assists in 78 games and would have been eligible for free agency in the summer. Instead, he will remain the first-line pivot for years to come.
"Pavel is one of the world's most skilled players and has developed into a bona fide superstar over the past two seasons," general manager Ken Holland said in a statement. "We think securing Pavel, who is moving into the prime of his career, is key to ensuring the long-term success of this franchise."
Datsyuk led the Red Wings in scoring last season with 28 goals and 59 assists. He also won the Lady Byng Trophy as the league's most gentlemanly player and represented Russia at the Olympics.
More importantly, he gave the Red Wings another dominant offensive presence on the top line following the departure of Sergei Fedorov and retirement of Steve Yzerman.
"Everyone in the organization wanted him to stay with us," said team owner Mike Ilitch.
His play has helped keep the Red Wings among the league's elite despite the recent turnover in its star-laden roster.
"I am very pleased to announce that I am continuing my hockey career with the Detroit Red Wings by signing a seven-year contract," Datsyuk said in a release. "This contract was extremely important to me. Especially since I have been a Red Wing since 2001."
Datsyuk won the Stanley Cup during his rookie season in 2001-02 and broke out in 2003-04, when he set a a career-high with 30 goals.