The veteran midfielder penned a deal to 2028 on the eve of yesterday's 1-1 draw with Girona.
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And asked after the game about Isco's new agreement, Pellegrini stated: "I think his renewal is very important.
"I've known him since he was 19, and we know how important he is to the team. He's going to continue giving the club everything he's given it so far.
"He deserved a renewal like this and applause like this."