After previously struggling to establish himself, Isco emerged as one of Real's key players in the closing stages of last season as the club captured La Liga and Champions League honours.
The Spain global enjoyed an impressive start to the life at the Santiago Bernabeu but his future at the club came under major scrutiny during the the first part of last season.
Catalan radio station RAC 1 reported at the time that Barcelona offered Isco a signing bonus of €20m to turn down a new deal at Los Blancos and move to the Nou Camp as a free agent once his contract expires.
Isco's new deal is set to be announced in the coming days having been a huge headache for Florentino Perez earlier in the summer.
The Blaugrana are said to be desperate to bring in an attacker this season after selling Neymar to Paris Saint-Germain for a world record transfer fee last week.More news: Analysts See $0.12 EPS for Staples, Inc. (SPLS)
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Who would make it into a combined Real Madrid and Manchester United XI? A formal announcement is expected next week after the Spanish Super Cup.
Real Madrid superstar Isco has disappointed Barcelona chiefs after signing another five-year deal for the reigning European and Spanish League champions.
Real manager Zinedine Zidane is gradually starting to hand the starlet more first-team responsibilities at the Estadio Santiago Bernabeu, but Barca would likely look to hand him more starting chances after Neymar's departure.
It is also claimed he has signed an incredible £643m (€700m) release clause.