McDonald and the Demons mutually agreed to part ways last year if a trade could be completed with 12 months left on his contract, but it didn't come to fruition.

The 28-year-old then seized his opportunity when recruit Ben Brown and young tall Sam Weideman suffered preseason injuries, becoming a key part of Melbourne's forward line in their run to the grand final.

"Very different scenario to this time last year - a little bit more positive and a bit less stressful," McDonald told Melbourne's website after signing until the end of 2024.

"It's been an awesome season for the team and I'm pretty excited to be able to do this and do it in a pretty low key way and just have it done with the footy club.

"Now we can move onto a more important thing: next weekend."

McDonald initially broke through as a key defender but exploded as a forward in 2018, kicking 53 goals in the Demons' run to the 2018 preliminary final.

But form and injury issues saw lean 2019 and 2020 seasons, leading to a near-exit in last year's trade period.

"The professional and respectful manner in which the club, Tom and his manager Alex McDonald handled that situation saw Tom come back into the fold with a clean slate and attack the preseason," list manager Tim Lamb told the club's website.

"On the back of that, his performances this year have been instrumental in our strong performance so far and we look forward to him continuing in the red and blue for the next three seasons."

McDonald has booted 31 goals in 22 games this season, taking his career tally to 140 majors in 192 appearances since his 2011 debut.

Australian Associated Press