The deal features an average annual value of $4,525,000 and the team will avoid arbitration with the restricted free agent.
Kakko, the number two overall pick by the New York Rangers in the 2019 draft, was dealt by the Rangers to Seattle on 18th December for defenceman Will Borgen and a pair of 2025 draft picks.
He made an immediate impact, scoring 10 goals and adding 20 assists in 49 games. Kakko averaged a career-best 17:03 of ice time per game with Seattle. Combined between the Rangers and Kraken, he totalled 44 points (14 goals, 30 assists), also a career best for the six-year veteran.
"Getting a contract done with Kaapo was a top priority this summer," Seattle general manager Jason Botterill said in a statement.
"We knew quickly he'd be a big part of our team moving forward. He's got size, skill and tremendous playmaking ability, and isn't afraid of going to the net. He fit in immediately with our group, and we're thrilled to have him under contract."
Kakko has played in 379 NHL games, amassing 71 goals and 90 assists. He was used more extensively on the power play for Seattle and responded with three goals on that unit after tallying seven in five-plus years for New York.