The new deal will keep the 28-year-old at the club until 2013.
Manchester City, Portsmouth, Fiorentina and Hamburg have all expressed their interest in the highly rated defender.
“The subject is very advanced and I intend to fly to Portugual in a few days to close the negotiations,” Luisao’s agent Giuliano Bertolucci explained.
The club’s sporting director Manuel Rui Costa said: “Luisao has much love with this club and we desire to make the kid a symbol for Benfica.”
