The outfielder, making $7,025,000 this year under his current deal, gets $9.5 million in each of the next two seasons and $8 million in 2015. The contract includes a $10 million mutual option for 2016 which would have a $3 million buyout if he has 320 starts or more from 2013-15.
"This is an amazing opportunity for me to stay and play in the city I grew up in," Quentin said. "I believe in this organization and what they're doing and I think they believe in me and I wanted to be a part of it."
The Padres also activated left-hander Eric Stults from the 15-day disabled list before Sunday's game against Colorado, and optioned right-hander Nick Vincent to Triple-A Tucson.
The 29-year-old Quentin had arthroscopic right knee surgery during spring training and missed the first 49 games of the season. But he homered five times in his first six games for the Padres after being activated from the disabled list on May 28. He began the day with a .273 batting average, nine homers and 22 RBIs in 40 games.
"The reasoning hasn't changed a lot since the day we traded for him," Padres general manager Josh Byrnes said. "He's a proven middle-of-the-order bat that we need. He brings an intensity, an edge, and a swagger to our team that we need."
Quentin, who was acquired in a trade with the Chicago White Sox on Dec. 31, grew up in nearby Chula Vista and attended University High School in San Diego.
Selected by Arizona with the 29th overall pick in the 2003 amateur draft, Quentin is a .253 career hitter with 130 home runs and 405 RBIs in 656 games.
"I'm happy about it," Padres manager Bud Black said. "I think it's great for the Padres, great for the city, and great for Carlos. Having Carlos for a number of years add continuity to the club. He's a guy we can put in the middle of our order on a daily basis. There are a lot of positives."
Stults had been sidelined with a strained lower back muscle since June 6. He is 1-2 with a 3.33 ERA in four starts with San Diego, which claimed him off waivers from the White Sox on May 17.
Vincent has made seven relief appearances during two stints with the Padres, going 1-0 with a 4.50 ERA. The rookie earned his first major league win on June 28 and has pitched for both Double-A San Antonio and Tucson this season.