News Corp Australia reports Collingwood will announce the deal at their family day on Saturday, ending any suggestion the midfielder could leave the club as a free agent at the end of 2014.
Swan turns 30 in February and the deal should ensure the Brownlow medallist finishes his career as a one-club player, as he has previously pledged.
While at one stage Swan suggested he could have ended his career after this season, another year of stunning possession counts has moved him to sign on.
Swan topped the league in disposals for the 2013 season, a feat he also achieved three times in succession from 2009.
He underwent gruesome wrist reconstruction surgery after Collingwood's year abruptly ended with an upset loss to Port Adelaide in the elimination finals.
Since joining the club in 2003, Swan has 219 games to his name.
Swan's contract extension comes after fellow midfielder Scott Pendlebury's elevation to the Magpies'