Fences have been mended between the Indianapolis Colts and running back Jonathan Taylor.

The Colts and Taylor agreed to a three-year, $42 million contract extension, including $26.5M guaranteed, a person familiar with the situation told USA TODAY Sports. The person spoke on condition of anonymity because of the sensitivity of the matter.

The deal makes Taylor one of the NFL’s highest-paid running backs.

Taylor is slated to make his season debut Sunday when the Colts take on the Tennessee Titans in Indianapolis. The running back had been on the PUP list to begin the season due to an ankle injury.

Saturday’s extension marks an end to a lengthy saga between Taylor and the Colts. Owner Jim Irsay, who engaged in war of words with Taylor's agent Malki Kawa, took to X to announce his excitement over the news.

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Taylor had requested a trade this offseason after the two sides failed to reach an extension in what was a difficult offseason for running backs attempting to cash in. The Colts acquiesce to Taylor’s trade ask but the organization didn’t find another team that met their trade demands. Taylor was subsequently placed on the PUP-list, which requires players to miss at least four games.

The Colts activated Taylor from the PUP-list Saturday and simultaneously news broke of his lucrative extension.

Why did Colts gave Jonathan Taylor three-year, $42 million contract extension?

Taylor is easily the Colts best player on offense, even with promising rookie quarterback Anthony Richardson. Taylor was the NFL rushing leader (1,811) and led the league in rushing touchdowns (18) in 2021. He was also named a first-team All-Pro after the 2021 season. He has produced 3,841 rushing yards and 33 rushing touchdowns in 43 career games.

Taylor’s return to the backfield will ease the burden off Richardson and also form a dynamic combination with the dual-threat rookie quarterback.

"I know he's a great player and I know I can do some things pretty well," Richardson said to reporters this week. "Just trying to combine those two things, I can only imagine what it's like but we won't see until it actually happens. We'll see and I'm excited."

The Colts drafted Taylor in the second round of the 2020 NFL draft out of Wisconsin.

Follow USA TODAY Sports' Tyler Dragon on X @TheTylerDragon.