The 20-year-old defender’s new contract contains a buy-out clause of €12 million until the end of the season which will then be raised to €20m in 2012-13.
Montoya's previous agreement was set to expire next summer and he had been linked with a move to Roma to link up with former Barcelona B team coach Luis Enrique.
The right-back has made just one appearance for the senior side, in the Champions League against BATE Borisov, but is considered one of Spain’s brightest young prospects and has already received a call-up to the national team.
Starting last month and continuing all through January, Goal.com will publish extracts from Graham Hunter's highly-anticipated book, 'Barca: The Making of the Greatest Team in the World'. In this Friday's extract, he looks at Pep Guardiola's early beginnings at Barca B in the Spanish third division ahead of his meteoric rise to world domination with the first team. Don't miss it!