The specific terms of the Talbot's extension have not yet been revealed, but Larry Brooks of the New York Post reported that it will pay the Ontario native $1.45 million through the 2015-2016 season.
Talbot was in the final year of his current contract, and he was set to be an unrestricted free agent after this season.
Talbot, 27, joined the Rangers in 2010 and debuted in the NHL last year. That season, as Henrik Lundqvist's backup, he had a 12-6 record, a 1.64 goals against average, a .941 save percentage and earned three shutouts.
In seven games this season, Talbot is 2-3 with a 2.34 goals against average, a .921 save percentage and two shutouts.
His shutout streak of 159:48 is the fourth-longest in the league this season.
The Rangers (15-10-4), are 10th in the Eastern Conference so far this season. They travel to play the Carolina Hurricanes (9-19-3) on Saturday night.