The new deal will keep the 22-year-old with the Blaugrana until the summer of 2018.
He told the club’s official website: “I’m very happy to have renewed. It’s a dream to be able to stay for so many more years at this club.
“I hope things remain as good as they are and that I can get to play. I’ll be taking all the chances the boss gives me and trying to do my best.”
Tello has been linked with the likes of Manchester United, Liverpool, Arsenal and Tottenham in recent months.
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The start of the 2017-18 Premier League season is just around the corner and is shaping up to be one of the most competitive yet.
As always it is the so called “big clubs” that have splashed the most cash in the transfer window so far this summer. Manchester United or City? Arsenal or Tottenham? Who are the winners and losers of the transfer window so far?