Real Madrid have stuttered somewhat to start the new season, though, having drawn two of their opening three games.
"I used to watch Real Madrid on TV", Marcelona told the club's website.
The extension will see that Brazilian left-back remain at Santiago Bernabeu till June 30, 2022.
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Catalan radio station RAC 1 fueled the saga further after claiming that Barcelona offered the Spaniard a signing bonus of €20m to turn down a new deal at Real and move to the Nou Camp as a free agent once his contract expires.
A victor of three Uefa Champions Leagues and one Liga title with Madrid, the 25-year-old Spain global has developed into a pivotal component of Zinedine Zidane's side over the past 18 months after initially struggling to establish himself.
Isco has been rewarded for his impressive form last season, which saw him step into the Madrid team following Gareth Bale's injury and help them to the Champions League and La Liga title, while he also scored as the club beat Manchester United to win the UEFA Super Cup last month. "Tomorrow, Friday, at 14:00 h, Isco will appear before media in press room at Santiago Bernabéu stadium", according to press release by white club.
Marcelo joined Real Madrid from boyhood club Fluminense as a prodigious 18-year-old in the winter transfer window of 2007, brought in as the long-term successor to his compatriot Roberto Carlos.