Included in the deal is a $1.5 million buyout a school would have to pay Georgia in order to hire Richt before the new contract ends after the 2010 season.
Said Georgia athletics director Vince Dooley: "We have made a strong commitment to him and he has also made a strong commitment to us.''
The new contract pays Richt $1.5 million per season, making the 2002 Southeastern Conference Coach of the Year one of the nation's highest paid coaches.
Richt's new salary places him at or near a level with such top coaches as Oklahoma's Bob Stoops, Tennessee's Phillip Fulmer and Texas A&M's Dennis Franchione, who recently left Alabama for a six-year deal worth $1.5 million to $2 million annually.
The total annual compensation package doubles the $750,000 salary Richt agreed to in his original five-year deal with Georgia. Last year, he received a one-year extension and a $50,000 raise to $800,000.
When he was hired in 2000, Richt said he wanted Athens to be the place he raised his family. He said he had waited to pursue a head coaching job until he found a place he could make his long-term home.
The new contract adds more force to that stance Richt has often repeated the last two years.
"This has been an overwhelming experience these first two years, and there's no place I'd rather be,'' Richt said. "We want to be here as long as Georgia will have us.''
Richt guided Georgia to an 8-4 season in 2001, but this year he coached the Bulldogs to their long-awaited return to SEC prominence.
Georgia (12-1) won its first outright SEC East division championship. On Dec. 7, Richt's Bulldogs defeated Arkansas 30-3 in the SEC championship game in Athens to win Georgia's first conference title since 1982.
Georgia, ranked fourth in the nation, could reach 13 wins for the first time in school history if its beats No. 16 Florida State (9-4) in the Jan. 1 Nokia Sugar Bowl.
Richt, 42, was an assistant coach at Florida State for 15 years before moving to Georgia. Because legendary Seminoles coach Bobby Bowden is 73, there already had been speculation Richt could be a leading candidate to be Florida State's next head coach when Bowden retires.
By agreeing to the new contract, Richt made it clear that he wants to remain in Athens.
Richt is Georgia's third head coach since the 25-year reign of Dooley ended after the 1988 season, but the new deal signals a return to the stability atop the program that marked the Dooley era.
"Certainly, Mark has done a remarkable job in just two years and has made a very positive impression on those at the university, in the community and state, and even nationally,'' Dooley said.
"While the new contract in many ways is a reward, it is also an expression of the faith and confidence we have in him for the future.''
As part of the agreement with Richt, the athletic association also pledged undetermined raises to Georgia's assistant coaches.
In addition to being named SEC Coach of the Year by his peers in the league and The Associated Press, Richt is a finalist for the Paul "Bear'' Bryant College Coach of the Year Award. He was recently named district coach of the year by the American Football Coaches Association.
Despite the success of the team this season and the awards won by Richt, the length and value of the new contract were especially significant. Georgia's last two head coaches, Ray Goff and Jim Donnan, were fired with years left on their respective contracts, leading to expensive settlements.
Richt, 20-5 in his two years at Georgia, has won over fans and university officials with the standards he has set on and off the field.
"This was a mutually beneficial agreement between a top-ranked athletics program and a man who has shown great ability as a coach and educator,'' said University of Georgia president Michael Adams.
"Not only has Mark produced a winning football program in a short time, he also has set high standards for academic success and character development.''
Added Adams: "I want Mark and his family to be part of the UGA tradition for many years to come.''
Georgia conducted its first practice in New Orleans Thursday night at the Superdome.
Richt will join Bowden and others at the Fellowship of Christian Athletes breakfast this morning, and the team will practice again this morning.