It follows the signature of emerging stars Dyson Heppell and Jake Carlisle earlier this season, while captain Jobe Watson also agreed to a new four-year deal to make him a Bomber for life.
Coach James Hird said the trio would play a big role in the second half of Essendon's season.
"It is a big show of faith that our younger players want to remain in the red and black. Our supporters should be very excited about our future," Hird said in a statement.
"With a healthy list and depth in our squad, we feel we’re in a good position at this time of year and we think our younger players have plenty to offer leading in to the second half of the season."
Baguley was upgraded to the club's senior list at the end of last year and has blossomed in stopping some of the competition's premier small forwards.
Kavanagh and Merrett were the club's first two picks at the 2011 NAB AFL Draft and have impressed this season, Merrett through the forward line and Kavanagh on the wing.
Stewart Crameri and Tom Bellchambers headline the Bombers whose contracts expire at the end of this season. AFL.com.au reported the Western Bulldogs have shown interest in Crameri
Follow AFL website reporter Callum Twomey on Twitter at @AFL_CalTwomey
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