Yzerman joined the team on May 25, 2010, and his contract was set to expire after next season.
"Since the day Steve agreed to serve as our vice president and general manager, he has worked tirelessly to transform our hockey department and establish the groundwork for sustained success," Lightning chairman and governor Jeff Vinik said in a release. "We are very pleased with Steve’s job performance thus far, and I am fully confident Steve remains the right person to continue to lead us.
"Organizationally, we remain committed to playing at the highest levels each season, regularly competing for the Stanley Cup, and I am very pleased that Steve has elected to be our leader for the next several years."
The Lightning have a record of 144-114-32 in just under four full seasons with Yzerman at the helm and have already qualified for the Stanley Cup playoffs in 2014.
The longtime Red Wings captain spent 27 seasons in Detroit, winning three Stanley Cups as a player and another as part of the front office.
Yzerman also served as executive director for Canada's last two gold medal-winning Olympic men's hockey teams, but stepped down after the 2014 Winter Games.
Part of the reason for that decision may be due to the complicated position he was put in selecting the members of the 2014 team, and in the process originally leaving Martin St. Louis, then of the Lightning, off the squad.
Following the news that Tampa centre Steven Stamkos was to miss the Olympics due to injury, St. Louis was chosen as his replacement on the roster. However, the strained relationship lead to St. Louis being traded to New York Rangers shortly after returning from Sochi after requesting the move.