Nico Rosberg travelled to the Hungaroring with a new two-year contract in his back pocket.
The team and the German driver announced the news with a video on Twitter showing Rosberg, 31, and Mercedes chief Toto Wolff signing a piece of paper.
And Bild newspaper said the deal including bonuses will be worth about EUR 45 million euros.
On Thursday in Budapest, Rosberg said he was navigating the process of negotiating the new deal without affecting his focus on his racing.
“Of course you need to be careful, because it can influence and take some energy away,” he said.
“I have Gerhard Berger who is handling it for me, specifically to make sure that I don’t lose any focus on the racing.”