The new deal will keep the 29-year-old at the club until 2012.
Milito has been struggling since suffering a serious injury to his knee during the Champions League semi-final against Manchester United two years ago.
“I’m immensely happy,” Milito told the club’s official website. “After suffering everything that I have it’s great.
“I’ve always said that this is the best group I’ve every played with, and now I can go on holiday delighted to have won the league and because I’ve been in good shape.”
