"Very happy to be coming back next year to play," Gonzalez said on his Twitter account. "I love everything about the Falcons and the city of Atlanta."
With his contract expiring, it was believed the perennial Pro Bowl selection might be playing his last season, but the extension will keep Gonzalez in Atlanta through 2012.
The five-time All-Pro passed both Cris Carter and Marvin Harrison this season to take sole possession of second place on the NFL's career receptions list behind Jerry Rice. Gonzalez's production makes him, by some distance, the most prolific tight end in league history.
Falcons general manager Thomas Dimitroff told The Associated Press that reaching an agreement with Gonzalez is an important first step in his dealings with the team's players who can be free agents.
"This wasn't about which free agent was the most important to secure," Dimitroff said. "It's a good start. It makes things a lot easier to see where we're going moving forward, trying to get the rest of our deals done. It's a significant deal, and it helps us gauge where we are with the rest of our financial situation."
Gonzalez played 12 seasons in Kansas City and is in his third year in Atlanta. With 79 receptions for 867 yards and seven touchdowns entering Sunday's regular-season finale, Gonzalez has 12 70-catch seasons in his career and nine in a row.
The Associated Press contributed to this report.