The 26 year-old confirmed the extension via his personal website. The four-year contract makes Sherman the league's highest-paid cornerback.
Sherman will potentially earn $57.4m (£33.9m), although $40m (£23.8m) of that fee is guaranteed.
"The goal has always been to stay in Seattle and continue to play for the Seahawks," a statement on Richardsherman25.com read. "With this chapter closed, I can continue to focus on what is important – defending our Super Bowl Championship and being the best cornerback in the NFL.
"This is a great moment for my family, foundations and the people who supported me to this point.
"Much appreciation to the Seahawks franchise, the coaches, my teammates, friends, the fans, my family and the 12s. The support does not go unnoticed and I carry that into each snap. From Compton to Stanford, fifth round draft pick to winning the Super Bowl – dare to be great."
Sherman was selected by the Seahawks during the 2011 NFL Draft.