Ross agreed to a multi-year contract with the Raptors late Monday that would keep him in Toronto.
The 24-year-old Ross had until midnight on Monday to sign a deal. If he did not, he would have become a restricted free agent on July 1.
While the Raptors did not disclose terms and financial details, Yahoo Sports reported the extension was worth nearly $33 million over three years.
Ross, who plays as a shooting guard and a small forward, is averaging 12.3 points, 2.7 rebounds and an assist per game this season.
All those numbers are improvements over his career averages of 9,2 points, 2.6 rebounds and 0.9 assists per game.
"Terrence has shown growth with each season," said Raptors president and general manager Masai Ujiri. "We are excited that he will be part of what we are building in Toronto. He is a great teammate and has worked hard to become one of our best shooters."
Ross tied the franchise record with a 51-point outing January 25, 2014 against the Los Angeles Clippers at Air Canada Centre. He also set career highs for field goals made (16), three-pointers made (10), free throws made (9) and minutes played (44) in that game.
The Portland, Oregon native was selected eighth overall by Toronto in the 2012 NBA Draft and averaged 6.4 points and 2.0 rebounds, making 65 three-pointers, in 73 games his rookie season. He followed that with career highs of 10.9 points and 3.1 rebounds in 81 games. He also posted career bests in three-point field goal percentage (.395) and three-point field goals made (161) in 2013-14.
Last season, Ross appeared in all 82 games averaging 9.8 points and 2.8 rebounds with 145 three-pointers as the Raptors won a franchise-best 49 games. In 11 career playoff appearances, he has averaged 5.7 points, 1.8 rebounds and 24.1 minutes.