The right-back, who is a product of La Masia, will imminently put pen to paper on a deal that will keep him at the Catalan club until 2018
The right back had been linked with a move away from Camp Nou at the end of the season, with Premier League outfit Liverpool among those reported to be interested in the 22-year-old, but the Blaugrana youth team product has now decided to commit his future to the Catalans.
"FC Barcelona and the player Martin Montoya have reached an agreement to extend his contract until the 2017-2018 season," read a statement on the club's website.
"The buy-out clause of the new contract is €20 million. The player's contract will be signed in the coming weeks."
Montoya broke into the Barca first team in 2012 and has since gone on to make 53 appearances for the club, as well as scoring two goals.