The attacking midfielder's previous deal was due to expire in June 2015 and a number of clubs were closely monitoring the 29-year-old's situation at Camp Nou.
Nevertheless, Iniesta has now ended all speculation about his future by agreeing a three-year extension to his existing contract.
Iniesta came through the ranks of the Barcelona youth academy and has made 479 official appearances for the Blaugrana since making his first-team debut under then head coach Louis van Gaal in 2002-03, scoring 48 goals in the process.
The Spain international has won 21 trophies during his time at Barca so far, including six La Liga titles and three Champions League trophies.
Iniesta will sign the deal on Monday to become the fifth Barcelona player to agree a new contract until 2018 after Sergio Busquets, Cristian Tello, Lionel Messi and Neymar.