Since arriving at the Santiago Bernabeu, Mendy has established himself as one of the top left-backs globally, with his defensive prowess playing a crucial role in the club's recent success.
The 29-year-old defender joined Los Blancos from Ligue 1 outfit Lyon back in 2019 in a deal worth around £47m.
After facing several injury setbacks throughout much of his tenure, Mendy regained his fitness last season and made 36 appearances for the club across all competitions.
Mendy to remain in Madrid until 2027
According to Marca, Real Madrid have now reached an agreement over a contract extension with Mendy that will see him remain at the club until 2027 with an option of a further 12 months.
The defender's current deal with Los Blanco was due to expire at the end of the upcoming season, meaning the club would have risked losing him on a free transfer.
The report adds that the player received his new offer a few weeks ago and is expected to formalise the agreement after he returns from his vacation, following his participation in France's Euro 2024 campaign.
It is understood that Carlo Ancelotti values the Frenchman very highly and has been pushing Los Blancos to offer him a new contract before the start of the new campaign.
With Fran Garcia and Mendy both fit ahead of the new season, Ancelotti is believed to be satisfied that he has the required options at left-back to head into the new campaign confidently.
Mendy contract extension spells bad news for Davies?
While Mendy's contract extension ensures stability at left-back for Madrid, it also raises doubts about whether they will pursue a move for Alphonso Davies this summer.
Los Blancos have been heavily linked with the Bayern Munich star this summer. Davies is currently in the final 12 months of his contract with the Bundesliga giants.
Bayern are believed to be keen to keep hold of the Canadian international but negotiations between the player and the club over a new deal have stalled in recent weeks.
Reports suggest that despite Vincent Kompany's side tabling a substantial pay increase, it falls short of Davies' demands, which are understood to be in the region of £17m per year.
While Madrid may still consider making a move for the 23-year-old this summer, offering Mendy an extension may suggest that the club are willing to wait another year before signing him as a free agent.