Williams emerged as a top transfer target for a number of European sides after impressing with his performances for club and country over the past year.
Last season, the attacker scored eight goals and provided 16 assists in 37 competitive appearances to help his side win the Copa del Rey and achieve a fifth-place finish.
Williams then went on to start six of Spain's seven matches at Euro 2024 where he registered three goal contributions to help his country clinch the silverware.
The 22-year-old's club future became the subject of much speculation following his European Championship exploits.
Williams's agents explain Barcelona snub
Barcelona pushed hardest to secure his signature, while there was also interest from clubs in the Premier League.
However, Barcelona were ultimately left disappointed as Williams opted to stay at San Mames for at least one more year.
The player's representatives, Felix Tainta and Juan Oyaga, have revealed their client decided against a summer move because he wants to spend another season with Athletic Bilbao.
Tainta and Oyaga told AS: "The lad has had an incredible year and has confirmed it, for me, by being the best player in the European Championships.
"Obviously we have had a lot of movement, a lot of travelling and being happy. It is compressed into a very short time, and at the end of the transfer window we are a bit stressed, but we like it. The boy has decided to stay, he wanted to stay for another year and work."
Did the Europa League final affect Williams's decision?
Williams ultimately has a strong emotional connection with Athletic Bilbao, having progressed through the club's academy system and established himself as a key player alongside his older brother Inaki Williams.
After helping Los Leones finish in fifth place last season, Nico Williams is now looking forward to playing alongside his brother in UEFA competition for the very first time.
There may be a possibility that the venue of the Europa League final played a part in Williams's decision to remain with the Basque club.
The 2024-25 Europa League final will take place at Athletic Bilbao's stadium of San Mames, offering the chance for Williams to win a European trophy alongside his brother at the home of his beloved club.
There is a long a way to go for Williams to realise that dream, with Athletic set to begin their European campaign against Roma on September 26.