The new deal will keep the 31-year-old at La Rosaleda until the summer of 2017.
Caballero is rated as one of the best goalkeepers in La Liga and has become a key player for Malaga.
The Argentinian goalkeeper joined Malaga from Elche in 2011.
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Summer 2016 is set to be a very exciting time for football fans, as this is when the long awaited Euro 2016 tournament kicks off.
Since Guus Hiddink arrived at the helm, Chelsea have improved considerably after a tricky start to the campaign.