The All-NBA guard will have a player option for $54.3 million in the last year of the extension, sources said.
Lillard, 28, has two years and around $61 million left on his current deal. The extension would keep him in Portland through the 2024-25 season.
The extension was first reported by The Athletic.
The Weber State product, drafted No. 6 overall by Portland in the 2012 NBA draft, has helped lead the Blazers to the playoffs six times --most recently to the Western Conference finals, where they were swept by the Golden State Warriors.
In the first round, Lillard hit a series-clinching 3-pointer at the buzzer to eliminate the Oklahoma City Thunder in five games -- the second series-clinching buzzer-beater of his career (2014 vs. Houston).
His 12,909 career points rank second in Blazers franchise history, trailing only Hall of Famer Clyde Drexler (18,040).