The new deal will keep the 21-year-old midfielder at Palermo until the summer of 2015.
Pastore has been linked with the likes of Real Madrid, Barcelona, Manchester City and Chelsea in recent weeks.
“I have extended my contract with Palermo to 2015,” he told the Corriere dello Sport.
“I’m very happy, I wanted to stay here and the signature I put is the confirmation of my will to stay.”
He added to El Grafico: “Maurizio Zamparini [president] loves me, we have a great relationship.
“I’m glad to hear that Real Madrid and Barcelona are interested in me, they are two of the most important clubs in the world.
“It would be nice to go in club like them one day in the future but for now I’m good at Palermo.”
