The 21-year-old has put an end to months of speculation surrounding his future at Camp Nou, with a €25 million (£21.8m) clause inserted into his new contract, which extends his stay for an extra two years.
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Tello had only signed his first professional first-team contract in December last season, where he would go on to play 34 games and score eight goals for the club.
The speedy winger joined Barca when he was 11 and rose up the youth ranks before breaking into the first team under former coach Tito Vilanova.
New boss Gerardo Martino has seen enough in Tello that he likes, with the attacker providing the Catalan giants with another another option in attack.