"Iniesta's extension is confirmed, we have shaken on it and that is enough for us," Barcelona president Sandro Rosell told a news conference.
The deal will probably be formalised on Monday, he said, putting an end to weeks of rumours about the emblematic player's future.
The 29-year-old midfielder's contract keeps him with Barcelona until 2018, after which it can be extended annually depending on his sporting performance, Rosell said.
The Barcelona boss gave no financial details but said in September Iniesta should be the second best paid player in the team, which also features four-time FIFA World Player of the Year Lionel Messi and Brazilian international Neymar.
Iniesta, a product of Barcelona's youth training and reportedly sought by several major European clubs, will thus be with the club until he is at least 34.
His current contract, which runs out in 2015, carries a 200-million-euro release clause.