The 20-year-old has been heavily linked with a move to the Premier League champions as well as Chelsea, and although Goal.com exclusively revealed that he headed Roberto Mancini's January wishlist, it now appears that he will remain at the La Liga outfit.
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Husillos said: "Isco's contract renewal is in its advanced stages and should be signed shortly.
"We will be here presenting Isco very soon. We will be here shortly to announce the renewal of his contract.
"It's not renewed as yet, but I think it will be very shortly. We understand it is virtually a done deal."
Goal.com understands the new contract will place Isco on approximately £50,000 per week, while he will pen a contract until 2018 that includes a buyout clause of £30 million.
Husillos added: "There are no sure things in football. Everything can change in an instant.
"The club's intention and what Isco has stated is that he is going to stay here; he's going to renew his contract.
"Life can also throw up a lot of surprises. That is the most conclusive statement that the club can make on the issue."
It is a blow for City, who viewed the midfielder as the one to inject some much-needed spark in and around the box as the club try to overhaul a four-point gap to league leaders Manchester United.
City were expected to activate his £17.5m release clause, as Goal.com exclusively revealed in December, before these latest developments, but that did not prevent Husillos from ruling out a future move, particularly if the European heavyweights continue to show an interest in the playmaker.
"Isco has really taken off. He's a great player and they want him at a number of clubs," he added.
"He's a Spanish international. We intend to keep him at Málaga for as long as possible.
"Everyone wants to improve and if he continues growing like this, he'll have to go to a legendary European club. That's understandable."