The Spain midfielder has put pen to paper on a five-year extension with the option for a further two depending on appearances.
He told the club's website: "My dream is to retire at the club. I really want to be associated with the club all my life.
"We have the team to keep winning and the philosophy of the club is unlike anywhere else."
Busquets graduated from Barca's academy in 2008 and has since made 390 competitive appearances for the Nou Camp outfit, winning LaLiga six times and the Champions League thrice.
The son of former Barca goalkeeper Carles Busquets, he became a world champion with Spain in 2010 and helped his country defend their European title two years later.