The 33-year-old has spent his entire professional career at Barcelona, having originally joined their youth ranks from Albacete in 1996.
Iniesta's current deal was due to expire at the end of the season and there had been tentative rumours that his lengthy association with the club could come to an end.
However, Iniesta stated last week that "good news" was forthcoming on a fresh deal and he has now penned a new lifetime contract.
Iniesta will have one eye on Xavi's appearance record of 767 across all competitions for Barca.
The midfielder currently sits on 639, second only to Xavi, and remains a key part of the first-team at the club, playing in six of their seven LaLiga games so far this term.
Iniesta – a World Cup and two-time European Championship winner with Spain – has enjoyed immense success with Barca and boasts eight LaLiga medals, five Copas del Rey and four Champions League titles.
News of Iniesta's renewal is likely to raise further questions about Lionel Messi's future at the club, however, with the Argentina superstar still yet to sign a new deal.
His contract is due to expire at the end of the campaign and, although Barca president Josep Maria Bartomeu is adamant that Messi has agreed to an extension, an official announcement is still yet to be made.
Barca have made a brilliant start to LaLiga, winning all seven of their league matches.