The Bulls announced the maximum-dollar deal worth around $94 million on Wednesday.
The guard, who grew up in Chicago, said it was "a dream come true" to play for the Bulls.
"[A]nd with this new contract the dream continues," said Rose.
Rose, the youngest MVP in league history last season, outperformed his rookie contract so much that a provision was put in the new NBA collective bargaining agreement for players in similar positions.
Because of the "Derrick Rose Rule," he will make around $10 or $11 million more than he would have under the old CBA.
Rose, 23, averaged 25.0 points and 7.7 assists last season, his third in the NBA since the Bulls drafted him with the No. 1 overall pick in 2008.
He guided the Bulls to their first appearance in the Eastern Conference finals in 13 years, where they lost to the Miami Heat in five games.
"We are thrilled that we have signed Derrick to an extension. On top of being a great player, what has set Derrick apart is his make-up, character, drive and his leadership," Bulls general manager Gar Forman said in a statement.
"That being said, we believe his greatest asset is his loyalty to his teammates, to our organization and to the city of Chicago. We look forward to having Derrick in a Bulls uniform for years to come, as he helps lead us in our quest to become a championship team."
Rose has averaged 20.9 points, 6.7 assists and 3.9 rebounds in 240 career games for Chicago.