The extension was agreed this week and Watford to make an official announcement shortly.
"It's a done deal," reported a source close to the all-action striker.
After netting 17 goals in his Premier League debut last season, Ighalo was reportedly wanted by several Premier League clubs with the latest being West Bromwich Albion.
The 27-year-old striker has also rejected a 38 million pounds bid from China.
His current deal with 'The Hornets' was to have ended in 2020.
He started out at Lyn Oslo in Norway before he moved to Udinese, who loaned him out to Spanish club Granada CF for several seasons before he moved to England.
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