The deal is done — Nuggets forward Danilo Gallinari has agreed to a four-year contract extension. The 23-year-old small forward will make close to $42 million in that four year span, a league source told The Denver Post.

The deal signifies Denver’s dedication to building around a young nucleus, the same nucleus that was handed the keys after Denver traded Carmelo Anthony and Chauncey Billups 13 months ago.

“It was easy to say ‘Yes’ to this contract,” Gallinari said at today’s Nuggets shootaround. “It’s very nice because we’ve been playing very well. We have a lot of very good young guys, very unselfish players and I’m looking forward to play with this team this year and with a lot of the guys in the next few years.”

The 23-year-old Gallinari had a breakout game last weekend at New York — 37 points, 11 rebounds — and averages 17.4 points per game this season, a career high, as well as 5.2 rebounds. Coach George Karl previously said he thinks the Italian they call Gallo can become an all-star someday.

“Last year when we got him everyone said he was a shooter and we think he’s more of a basketball player than a shooter,” Karl said at the shootaround. “We think he’s a playmaker, he can play many positions.”

Said shooting guard Arron Afflalo: “It’s well-deserved. Gallo’s been playing great this year, he’s been consistent in his approach to the game since his rookie season so I’m very happy for him. He’s still young and only going to get better.”

Born on 8/8/88, Gallo was drafted sixth overall in 2008 by the Knicks. At 6-foot-10, he showcased good range and the ability to penetrate smartly, making him an enticing piece when Denver dealt Melo to New York.

This is the third signature signing by Denver this winter — the Nuggets locked up starting power forward Nene (five years, up to $67 million) and Afflalo (five years, up to $43 million).

Taking advantage of youth, depth and coaching, the Nuggets have leapt to a 12-5 record in this lockout-condensed season, heading into tonight’s game at Sacramento (6-12).

Benjamin Hochman: 303-954-1294 or bhochman@denverpost.com

