Hooker's contract expires this year but AFL.com.au understands this signature will make him a Bomber through to the end of the 2016 season.
It marks a huge turnaround for Hooker, whose name has been floated during the last two trade periods.
Last year, with one season remaining on his contract at Windy Hill, the West Australian was offered a deal to move to West Coast.
The three-way trade would have seen Hooker join the Eagles, Mitch Brown head to St Kilda and the Bombers gain two mid-20s draft picks.
But Hooker chose to prove himself at Essendon, a decision that has been vindicated by his excellent form throughout 2013.
"There was an offer from West Coast to go back home, which is always tempting with friends and family there," Hooker told AFL.com.au earlier this year.
"But I decided I wanted to stay at Essendon. I've got a lot of mates here and I really enjoy playing with the club. I'm glad I made that decision.
"I thought about it and weighed up all the offers. I sort of felt I had unfinished business at Essendon as well this year and so I was really happy to stay. Once you know what your decision is, you just stick with it.
"I backed myself and I think that's the only way to do it."
Hooker has become an important member of Essendon's backline group, having added an attacking element to his defensive game.
Twitter: @AFL_CalTwomey
