The new deal envisages nearly C$30 million (£16.3 million) being spent on a major revamp of the track and paddock infrastructure at the ageing Circuit Gilles Villeneuve, considered one of the championship's most out-dated.
Montreal mayor Denis Coderre told reporters ahead of qualifying at the island track that the agreement, yet to be signed off by municipal, federal and provincial authorities, was a formality.
"If we had the authority to announce the agreement it is because we have the full support of our people," he said. "Regarding Mr. Ecclestone and ourselves, everything is OK.
"Because it is taxpayers' money we have to go through the political process but for us it is a formality."
Three levels of government will invest $187 million over the next 10 years to keep the race in Montreal with the Government of Canada and Tourism Montreal each throwing in $62.4 million, Quebec $49.9 million and Montreal $12.4 million.
The City of Montreal will also pay for the renovations.
The Canadian Grand Prix has been held in Montreal since 1978 and become one of the most popular events on the F1 calendar for fans, drivers and teams.
It is also one of the most successful sporting events in Canada, pouring an estimated $70 million annually into the local economy.
"You can feel the passion all over the place. It is not just a business deal. This is the place of Gilles Villeneuve, Jacques Villeneuve. It is part of our DNA and everybody feels that," said Coderre.
"We're not talking about expense, we are talking about investment. We are seeing that it is a window to the world."
Sunday's race is the last on the current contract and the new deal ends months of tense negotiations and speculation.
"I am delighted with the agreement reached between the commercial rights holder, Formula One World Championship Limited and the governments of Canada and Quebec and the City of Montreal and Tourism Montreal," said promoter Francois Dumontier.
- Sports & Recreation
- Circuit Gilles Villeneuve