The 18-year-old’s new deal will run until 30 June 2026 and he is expected to officially sign it on Friday.
He was also part of the Spain squad that reached the Euro 2020 semi-finals.
Spain boss Luis Enrique started him for each of his side’s games at the tournament as he impressed on the international stage.
Pedri’s exploits resulted in him being included in Uefa’s team of the tournament.
The teenager also helped Spain win Olympic silver in the summer after they were beaten by Brazil in the final.