The new deal will keep the 30-year-old at the club until the summer of 2013.
“I’m very happy with the renewal,” he told the club’s official website. “I’ve always said, since I arrived at this club, that I was very happy and that it was my hope to stay at Atletico for many years.
“It’s a dream to be able to extend my contract for two more years.
“I’m convinced that we can obtain titles in this time.”
Atletico Madrid have had a poor start to the season in the Primera Division.
“The club and my team-mates and I will do everything possible to win everything possible, although now the most important thing is to get out of the situation that we are in,” Forlan added.
“Soon we will be in the places where we should be.
“I’m confident that the improvement will bring good results. Nobody should doubt that we (the players) are the first people who want to turn this situation around.”
