The 31-year-old has extended his stay at La Rosaleda having originally joined from Elche back in 2011
The 31-year-old arrived at La Rosaleda in 2011 from Elche and has become a key member of the team as they competed in the Champions League for the first time last season.
He also was one of the best 'keepers in La Liga last season and missed just two league games throughout the campaign as Malaga finished sixth.
Caballero also holds the club record for number of minutes without conceding a goal (479).
The Argentinian is yet to be capped by his country, although a strong season in Spain could pave the way for a call up for the 2014 World Cup in Brazil next summer.