It includes a team option for the third season, according to ESPN.
Williams will probably finish this season having played an average of 30-35 minutes per contest, the highest mark of his career.
For the Clippers, they stay competitive for a playoff spot this season (especially if they don't move DeAndre Jordan at the trade deadline, and it seems less and less likely they will, but they might find a deal for Avery Bradley).
Lou Williams nearing contract extensionWhat's the story?
Williams, the NBA's leading bench scorer (22.0 ppg), is averaging career-highs in points (23.3), assists (5.3), three-point percentage (38.0%), free-throw percentage (90.0%) and minutes played (32.5) in his 13th National Basketball Association season.
It has been an extremely challenging season for the Clippers.
Williams, one of the NBA's elite microwave scorers, was thought to be one of the hotter trade commodities available on an affordable, expiring deal.
Currently, Williams is earning $7 million in the final year of his contract. Williams, 31, was set to become a free agent this coming summer.
Somehow, the Clippers managed to actually escape the grasp of a dramatic core headlined by Blake Griffin and Chris Paul with minimal injuries or really cause for concern.
If the Clippers are really looking ahead to the future, they will push to flip Williams for some form of draft compensation, whether it be in this year's draft or in the next few years. Across 12 years with Philadelphia, Atlanta, Toronto, the Lakers and Houston, Williams averaged 13.5 points.