The Flames announced that Monahan signed a two-way contract that will pay a base salary of $832,500 with a signing bonus of $92,500 each year at the NHL level and a yearly AHL salary of $70,000.
If Monahan, an 18-year-old Brampton, Ont., native, achieves performance bonuses, he can earn up to $1.77 million per season with the Flames.
A centre who was chosen sixth overall in this year's NHL entry draft, Monahan has spent the past three seasons with the OHL's Ottawa 67's.
He recorded 31 goals and a career-high 47 assists with in 2012-13, matching the 78 points he produced in the previous campaign.
He won gold medals with Team Ontario at the World Under-17 Hockey Challenge and Canada’s under-18 national team at the Ivan Hlinka Memorial Tournament.