The deal includes an early termination option prior to the 2024-25 season.
Davis' max deal comes one day after co-star LeBron James signed a two-year, $85-million extension that will keep him under contract through the 2022-23 campaign.
The All-NBA big man declined his $28.7-million player option earlier this offseason to become an unrestricted free agent. He reportedly intended to return to Los Angeles all along but took his time determining an appropriate contract length.
Davis, 27, is coming off a terrific debut season with the defending champion Lakers after arriving in an offseason trade from the New Orleans Pelicans. He averaged 26.1 points, 9.3 rebounds, 2.3 blocks, and 1.5 steals in 62 starts while finishing second in Defensive Player of the Year voting.