The agreement was completed Wednesday, according to a person with knowledge of the contract who asked not to be identified because the deal had not been officially announced. The deal will be worth between $22 million and $23 million.
The Coyotes scheduled a news conference for Thursday.
Doan, a 30-year-old winger, has spent his entire NHL career with the Coyotes. He's among the franchise leaders in goals (191), assists (261), points (452) and games played (778). He became captain in 2003-04.
Doan has a team-high 19 goals in 48 games this season and has 16 assists.
The deal came two days after the club traded left wing Ladislav Nagy, who was eligible for free agency after the season, to Dallas for left wing Mathias Tjarnqvist and a first-round pick in this summer's draft.
Doan, another potential free agent, was also the subject of trade rumors as the Coyotes dropped out of playoff contention. But the club decided to extend Doan's contract, a move that solidifies his position as the face of a franchise struggling for attention in a crowded sports market.
Doan been a cornerstone of the club's marketing efforts, appearing on magnet schedules and other promotional items. He was Winnipeg's first-round draft pick in 1995.