Fyfe said the deal was the right fit for him and for the club, allowing the Dockers to have the first option of retaining him as a free agent and ensuring that he didn't become 'complacent'.
Fremantle's star midfielder signed the new deal on Wednesday, believed to be worth around $2.5 million.
"I think it suits both sides," Fyfe said on Thursday.
"Obviously commercially with the free agency window, it brings me out as an eight-year player, and Fremantle will have the first option to retain me as a free agent.
"Three years was the best fit. My last contract extension was three years as well.
"Any longer than that there's the option and possibility to potentially become complacent."
Clarke in doubt as Lyon weighs up options
Fyfe said he was sure he could handle the responsibility of becoming one of the highest paid players at the club.
"It hasn't all of a sudden been lumped on top of me," he said.
"As I've progressed and more responsibility has come onto me, I've handled that. I'm really keen to take any responsibility that comes my way and continue leading the team and play good footy, as I feel I've done so far."
Last year's Fremantle best and fairest has been talked about as a future captain of the club.
He is not in the leadership group but seems perfectly placed to assume the mantle from long-time leader Matthew Pavlich in the coming years.
Fyfe said the captaincy was not something he coveted, but it was a role he would be willing to take on if the responsibility was given to him.
"I wouldn't say I aspire to it," he said.
"But the beauty of our leadership system is it's player voted.
"So ultimately if the playing group want me to lead them, then I'd have no problems in doing that."
With his contract sorted Fyfe can turn his attention to West Coast on Saturday afternoon.
He said he was relieved he wouldn't have to line up against the injured Scott Selwood but believed the Eagles could not be underestimated in a Western Derby.
"We always go head-to-head and he usually stitches me up," Fyfe said.
"Our form has been pretty good, but they won last week as well and derbies bring out the best out in both sides. So we are expecting a really fierce battle."
yfe has proven one of the best draft selections of the modern era, with the Dockers snaring him at pick No.20 in the 2009 NAB AFL Draft.
He polled 18 votes in last year's Brownlow Medal and was instrumental in the Dockers making their first Grand Final. Fyfe earned an impressive 50 Brownlow votes in his first 72 games and has now played 83 games.
General manager of player management Brad Lloyd said Fremantle was extremely pleased to re-sign the 2013 club champion.
"Nathan has become an integral part of our midfield group," Lloyd said.
"He is a super competitor who has had a strong intent and focus to get the best out of himself from the day he arrived at the football club He is still only 22 years of age, so we look forward to his continued progression in the coming years."
"Nathan has become an integral part of our midfield group," Lloyd said.
"He is a super competitor who has had a strong intent and focus to get the best out of himself from the day he arrived at the football club He is still only 22 years of age, so we look forward to his continued progression in the coming years."
