Real Madrid have announced that Isco has signed a new five-year contract, keeping him at the Santiago Bernabeu until June 2022.
The Spanish playmaker will appear before the media at the stadium on Friday after penning his new deal.
According to reports in Spain, the 25-year-old will earn £5.34m a season with a release clause of £623m.
A number of clubs, including Barcelona and Bayern Munich were said to be interested in the player, who had entered the 12 months of his deal at the back end of last year.
But an impressive run of form in the latter half of last season saw Isco establish himself as a crucial first team figure, becoming a fan-favourite and cementing himself in the club’s future plans.
And he has picked up where he left off this campaign, starting all three of Madrid’s La Liga games as well as Wednesday’s 3-0 victory over APOEL in the Champions League.
Isco joined Madrid from Malaga for a fee of £27m in 2013 and has gone on to score 34 goals in 197 appearances, winning the Champions League three times and La Liga once.
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