The running back confirmed terms of the deal to the Associated Press on Friday.
Lombardi: The Fisher factor
"It's part of the business," Jackson told reporters. "I've said that from the beginning that, even in 2004, I wanted to retire here. This organization gave me the opportunity to live out a dream.
"In 2008 they extended me and at the end of the season we'll see what happens with me. But something is happening here and I want to be a part of it."
Jackson has seven straight 1,000-yard seasons, the longest active streak in the NFL. He's making $7 million this season and would make $7 million in 2013, too, and must notify the team by early February if he wants to void the deal.
"We want to have Jack back," coach Jeff Fisher said. "We want him to be a part of our future. Jack is one of the major faces of this franchise and we'd like to give him an opportunity to finish his career here."
Copyright 2012 by The Associated Press