The 32-year-old has spent his entire career with the Bernabeu outfit, making more than 360 league appearances, netting 45 times.
However, the veteran was not expected to feature regularly this season following the club's £200 million summer spending spree on Kaka, Cristiano Ronaldo, Xabi Alonso, Alvaro Arbeloa and Raul Albiol.
As a result, the former Spanish international - who has won 15 caps - was linked with moves to Arsenal and Galatasaray, as well as clubs in both Qatar and Vietnam.
But the midfielder eventually decided to stay put after reassurances from new coach Manuel Pellegrini that he was part of his plans.
The former Villarreal head-honcho has, so far, honoured his promise, with Guti handed playing time, scoring against FC Zurich and Xerez.
And the player has revealed that he was tempted to leave the 31-time la Liga winners this summer, but was persuaded to stay by Pellegrini.
"Staying here was tough because so many good players were being signed and some of us had to leave," he said.
"But he [Pellegrini] gave me the confidence to stay on for another year. The only way I can thank him is by playing my very best.
"I am going to play out the two seasons I have left. And I want one more.
"Winning the Champions League at home would be a great ending. There is little left to win after that."
