Speaking on Friday afternoon, the 43-year-old revealed that he had come to an agreement with the La Liga champions over a new deal.
Barcelona have now confirmed that Xavi has signed a deal until the end of the 2024-25 campaign, with the option of an additional 12 months.
"FC Barcelona and coach Xavi Hernandez have reached an agreement for the extension of his contract until 20 June 2025 with the option of an additional year," read a statement from the Catalan outfit.
"The renewal is sealed. It will be official soon," the head coach told reporters earlier on Friday when asked about his potential new deal. "We arrived at a difficult time, with difficult circumstances. The sports department and the team did a very good job.
"Two important titles were won last year, but we are still a work in progress. In the first year, we already showed positive things and this season, we must be decisive."
Xavi returned to Barcelona as head coach in November 2021, and he has led the team to 60 wins from his 96 games at the helm, in addition to 17 draws and 19 defeats.
The Catalan outfit won the La Liga title and Spanish Super Cup last season under the legendary midfielder, but he is yet to lead the team out of the group stage of the Champions League.
Barcelona have also been in excellent form this season, winning five of their six matches in all competitions.
The La Liga champions opened their campaign with a goalless draw against Getafe before recording four straight wins over Cadiz, Villarreal, Osasuna and Real Betis, with a total of 13 points leaving them second in the table.
Barcelona then started their Champions League group-stage campaign with a 5-0 victory over Royal Antwerp on Tuesday night.
The Catalan side now have three league matches against Celta Vigo, Mallorca and Sevilla before heading to Porto for their second European game of the season on October 4.
Xavi started his managerial career at Al-Sadd in 2019 after finishing as a player with the Qatar outfit, spending more than two years at the helm before his return to Barcelona.