A person spoke to The Associated Press on condition of anonymity because the agreement is not official. USA Today first reported the deal.
The contract, which should be finalized before spring training, would make Hernandez the highest-paid pitcher in baseball history.
Hernandez is set to earn a record average annual value of $25 million through 2019. The right-hander was scheduled to make $19.5 million this season and $20 million in 2014.
The 26-year-old Venezuelan has been one of the most dominant pitchers in the MLB over the past few years, winning the 2010 American League Cy Young Award and capping his superstar status after throwing a perfect game in August 2012.
The three-time All-Star owns a career record of 98-76 with a 3.22 ERA in eight years with Seattle.
Hernandez's contract breaks the previous record for a pitcher after surpassing CC Sabathia's seven-year, $161 million deal.
His annual average of $25 million is also higher than the $24.5M Zack Greinke will receive from the Los Angeles Dodgers on his six-year contract.