What general manager Dave Nonis called "short and productive" negotiations ended with Kessel signing a US$64-million, eight-year contract on Tuesday.
The deal has a salary cap hit of $8 million per season. It begins in 2014-15 and runs through the 2021-22 season.
"I'll be on the hook for some team dinners here or there, but I don't mind," Kessel said at a news conference before Tuesday night's season opener at Montreal. "I always wanted to be (in Toronto).
"This is the place I want to play. I want to finish my career here. It's a great city, the organization's unbelievable, and I'm really excited to continue here."
The contract includes a limited no-trade clause. Kessel has one season left on his previous deal at $5.4 million.
General manager Dave Nonis said negotiations started last week when Kessel, who could have become an unrestricted free agent next July, told him he wanted to remain a Leaf.
"There weren't negotiations early in camp," said Nonis. "I wanted to hear him tell me he wanted to be a Toronto Maple Leaf and once he did, we were able to work quickly and reach an agreement."
Kessel reportedly wanted either to sign a deal before the season or wait until the summer.
The speedy right-winger had 20 goals and 52 points in 48 games last season. He has 379 points (185-194) in 504 regular-season games over seven seasons with Toronto and Boston.
The six-foot, 202-pound native of Madison, Wis., has 21 points (13-8) in 22 career playoff games. He had four goals, including two game-winners, in Toronto's seven-game, first-round playoff loss to the Bruins last season.
"I think Phil made some great strides in that series," Nonis said. "He had a great year. He's had several great years. That's the one thing I think people overlook."
Kessel also played for the United States at the 2010 Vancouver Olympics.
The two-time all-star, who will turn 26 on Wednesday, was drafted by the Bruins with the fifth overall pick in the 2006 NHL Entry Draft.
He was dealt to Toronto four years ago for two first-round picks and a second-round selection. The Bruins used the picks to draft Tyler Seguin, Dougie Hamilton and Jared Knight. This summer, Seguin was sent to Dallas in a multi-player deal that sent Loui Eriksson to Boston.
The Kessel deal was widely seen as a coup for Boston, but Nonis said the Leafs have no regrets.
"We're happy with Phil and we've always been happy with his production," he said. "You forget how young a player he was when he got here.
"He's got a lot of quality years ahead of him. That's why we were very comfortable going to a eight-year term with him."
Not one to enjoy the spotlight, Kessel's quiet demeanour has sometimes been taken for aloofness, something Nonis vigorously denies.
"The one knock that Phil had on him, that I think was totally unfair, is that he wasn't a great teammate," Nonis said. "That's completely untrue.
"He's quiet, maybe he's not outgoing as some of the people in a Canadian market would like, but he's a great teammate. He's well liked by everybody in our room."
Forward Joffrey Lupul, who is also signed to a long-term deal with the Leafs, applauded the signing.
"Obviously, everyone's excited," said Lupul. "He's certainly our most talented player and his game's come a long way since I've been here.
"I've got to see him involved as a player and as a person and it's nothing but good news to have him locked up long term."
Lupul is signed for the next five seasons at $5.25 million per year. Toronto also recently signed free agent David Clarkson for seven years at $5.52 million annually along with centre Tyler Bozak for five years with a $4.2-million annual cap hit.
There are several other players due to become unrestricted free agents next July, including team captain Dion Phaneuf. Nonis said he would look at getting other players signed, but was in no hurry.
"We address everybody individually," he said. "I wouldn't say we're going to have a monthly announcement on signing free agents."
Kessel was suspended for the final three games of the pre-season after he slashed Buffalo Sabres tough guy John Scott in a game last month.
The Leafs also said Tuesday that James Reimer will start in goal against the Canadiens, with off-season acquisition Jonathan Bernier as his backup.
"It's good,"said Reimer. "You always want to be the guy that starts it off."
When the lockout-shortened 2012-13 season began in January, Reimer was passed over for the opening night starting job in favour of Ben Scrivens.