The Giants opted to place a second straight franchise tag on Williams, which was going to cost them $19 million fully guaranteed for the 2021 season.
However, this new deal should create some cap space for New York and allow them to start adding some players in free agency.
Williams, 26, is a former first-round pick of the Jets back in 2015. He was in the final year of a four-year, $18.6 million rookie contract when the Jets picked up his fifth-year option last April.
Williams was later traded to the Giants. He made a base salary of $14.2 million for the 2019 season before the Giants used their franchise tag on him last year and then tagging him again last week.
In 2020, Williams appeared in all 16 games for the Giants and recorded 57 tackles, 11.5 sacks, a fumble recovery and a pass defense.