The 25-year-old actually signed the deal in July, before heading to the U.S. for Real's pre-season tour, but it was agreed not to make the extension public until this month.
Find out what time Real Madrid vs Barcelona gets underway where you are in the world. However, some uncertainty has remained as Los Blancos are yet to announce the new deal despite his current one set to expire in less than a year.
Gracenote's computer-generated Euro Club Index is predicting that Real Madrid will finish as champions again this season, in an even closer title race.
Liverpool have been linked with two wingers to add to their squad this summer, with Diario Gol claiming an offer has been submitted for Real Madrid's Marco Asensio, while Transfermarketweb reports Diego Laxalt of Genoa is also a target.
The Portuguese forward appeared appeared against his former club Manchester United for just seven minutes as Madrid won the UEFA Super Cup 2-1. I'm happy to be working so well with my staff.
Barcelona face arch rivals and La Liga champions Madrid in the first leg of Spain's traditional curtain raiser on Sunday at the Nou Camp.
It was not too long ago that Isco was considered a luxury player at Real Madrid.
Lionel Messi، Jordi Alba، Samuel Umtiti and Arda Turan were all pictured training with their Barcelona team-mates as they aim to build up their fitness levels and sharpness ahead of the upcoming campaign.
Zinedine Zidane's side are clearly wary having seen Neymar leave Barcelona for Paris Saint-Germain after the French club met the Brazilian's £198m clause. "If we think it is going to be easier tomorrow we will be mistaken".
The Spanish publication points out that Barcelona, City and Bayern have made enquiries about Isco's availability in recent times but the player is ready to snub them to commit his future to Real Madrid with a new five-year deal.