The attacking midfielder, whose contract was due to finish next summer, has agreed a four year extension, tying him to Real Madrid until 2022.
Isco will give a press conference on Friday morning at the Santiago Bernabéu, accompanied by Emilio Butragueño, Real Madrid's director of Institutional Relations, to discuss his new deal.
Isco to have 700 million euro buy-out clause
Isco will be have a 700 million euro buy-out clause, following the trend of inflating such clauses to eye-watering levels to attempt to fend off interest of other clubs, particularly in light of PSG swooping in to take Neymar from Barcelona by paying his buy-out of 222 million euros.
Isco: staying at Real Madrid
Despite being tempted by offers from around Europe, particularly last winter, when his future at the Bernabéu and the possibility of guaranteed playing time appeared limited, Isco decided to stay and when asked about the situation after Real Madrid won the Liga last season, Isco said: "Relax, I'm staying".
And he's proved true to his word, inking a deal to keep him at the Bernabéu to 2022. Isco joined Madrid in 2013-14. He's played 197 games for the club, scoring 34 goals, and giving 46 assists. He's lifted three European Cups, one Liga, three European Super Cups, two Club World Cups, one Copa del Rey and the Spanish Super Cup.