The new deal will keep the 25-year-old at the club until the summer of 2015.
The Uruguayan midfielder has become a key player at Napoli since joining the club three years ago.
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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.