Fernando Torres and Atletico Madrid have come to agreement on a new one-year contract for the 2017-18 season, the club announced Wednesday.
Former Spain striker Torres is in his second stint with his boyhood club, having re-joined from AC Milan in January 2015 on the back of wildly contrasting spells at Liverpool and Chelsea in the Premier League.
The striker was out of contract and had been rumoured to be potentially leaving the club, with reports a few weeks ago suggesting he could land in Mexico's Liga MX.
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But Torres will instead remain with the capital club, which is barred from registering any new players during the summer transfer window after failing to win their appeal of a transfer ban.
In total the 33-year-old has 105 goals for Atletico, including 28 under current boss Diego Simeone.
Torres largely serves as back-up to the likes of Antoine Griezmann and Kevin Gameiro nowadays but will continue to provide welcome squad depth for Simeone.
"I am very happy to continue one more year together," said Torres in brief statement on Atleti's official website.
Alexandre Lacazette was widely linked with a move to Atletico before the Court of Arbitration for Sport upheld their ban and the France striker became Arsenal's record signing earlier Wednesday.