The Spain international has committed himself to the Blaugrana until 2019 with the option of a further 12-month extension.
Busquets, whose previous deal still had three years to run, will sign his new contract at 13:00CET at the club's offices at Camp Nou on Friday.
Busquets has spent his entire professional career at Barca, having come through the club's famed youth academy before breaking into the senior squad in September 2008 under former boss Pep Guardiola.
The 26-year-old defensive midfielder quickly established himself as a first-team regular and played an integral role in an unprecedented era of success for the Catalans that featured two Champions League triumphs, in 2009 and 2011.
Busquets also starred in Spain's World Cup triumph in South Africa in 2010 and their subsequent success at Euro 2012.