Iniesta's previous deal at Camp Nou had been due to expire in June 2015, with rumours suggesting that the Spain international midfielder could be set to leave the Catalan club.
Premier League side Manchester United had been linked with a move for the 29-year-old, who has spent his entire career with Barca.
But Iniesta has now put an end to the speculation by penning a renewed deal with Gerardo Martino's side.
Iniesta has made over 450 appearances for Barcelona, scoring 46 goals in all competitions.
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