Nowitzki's new deal includes a player option that would allow him to opt out of the deal a year early in 2016. It also preserves the same no-trade clause that Nowitzki held in his last contract with the team.
The average salary called for in the new contract represents a big cut for the 36-year-old Nowitzki, both from his $22.7 million salary of 2013-14 and his general value as a player. The two sides had been negotiating a new deal for several weeks, and Nowitzki had said he was planning on taking less money to allow the Mavericks more flexibility to add other players.
The Mavericks' main target in free agency this summer behind Nowitzki has been Carmelo Anthony, who visited the team as part of his free agency tour on Wednesday. According to ESPN's report, should Anthony decide to re-sign with the New York Knicks, Dallas intends to make a significant offer to Houston Rockets restricted free agent Chandler Parsons or Cleveland Cavaliers free agent Luol Deng.
RELATED: NBA free agency: Latest buzz, rumors
On June 25, the Mavericks made their first move of the offseason when they acquired Tyson Chandler and Raymond Felton from the Knicks in exchange for Jose Calderon, Samuel Dalembert, Shane Larkin, Wayne Ellington and two second-round picks.
Nowitzki, a 12-time All-Star, has averaged 22.5 points and 8.1 rebounds per game over his 16-year career.