Cole has come through the academy ranks at Welford Road - going on to make 70 appearances for the Tigers.
The 24-year-old, who had a short loan spell at Nottingham, has also won 23 caps for England since making his international debut in the 2010 Six Nations.
And director of rugby Richard Cockerill is delighted to bring a successful end to protracted talks over a new deal.
"We have agreed terms on three years and the detail is just being bashed out with Simon Cohen (Leicester's chief operating officer) and Dan's agent and solicitors to make sure all of the fine detail is in place as it should be," said Cockerill.
"Dan is born-and-bred in the city and has come through our academy. He is 24 and I have coached him for eight years. I know him very well. He wants to play for this club. He doesn't want to play for another club.
"We have done everything we can to try to keep him for all of the right reasons. Firstly he is a world-class player and secondly there is no point in producing these players if you let them go in their prime."