The new deal will keep the Spain Under-21 star at the Camp Nou until the summer of 2015 and has a €90million buy-out clause.
A statement on Barcelona’s official website reads: “FC Barcelona have reached an accord with Thiago Alcantara to improve and extend his contract with the club for another two seasons until June 30, 2015.
“The recissionary clause of the contract will be €90 million.”
The youngster has recently been linked with moves to the likes of Chelsea, Villarreal, Roma, Arsenal and Manchester United.
