Staios will earn $2.9 million in each of the 2007-08 and 2008-09 seasons, $2.8 million in 2009-10 and $2.2 million in 2010-11.
"Steve exemplifies what it means to be an Edmonton Oiler and we couldn't be happier with this long-term extension," Oilers GM Kevin Lowe said in a statement. "He is one of those players who leads by example and will do everything it takes to accomplish the task at hand."
Staios, 33, would have been an unrestricted free agent next summer. He had a goal and eight assists in 20 games this season before Tuesday night's game against Calgary. The Hamilton native also led the team in penalty minutes and blocked shots and was second in hits.
Staios signed with the Oilers in July 2001.