The 35-year-old Croatia international has put pen-to-paper on a contract that would have expired this summer, taking his stay to the Spanish capital up to a decade.
Modric joined Real Madrid from Tottenham Hotspurs in the summer of 2012 and has won four UEFA Champions League titles, two La Liga trophies, two Copa del Reys and a host of other trophies in his time at the club.
In 2018, the former Dinamo Zagreb man also became the first player other than Cristiano Ronaldo or Lionel Messi to win the coveted Ballon D’or award in a decade.
"I'm very happy and proud to stay at this club for one more year," he told Real Madrid TV. "There's nothing better than playing for Real Madrid and there's no better feeling than playing at the Bernabeu.
"Everyone wants to play for Real Madrid and I've been lucky enough to do it. I'm going to be in my 10th year and there's nothing better than representing this great club.
"Nine years of dreams and hopefully the 10th season will also be special.
"It means a lot to me. It makes me very proud and will mean that I'll have been here for almost 10 years. That's incredible, something I didn't even expect.
"I came here when I was almost 27 and the last thing I expected was to be at this great club for so long.
"The demands here are so high and you always have to be at the very best level to deserve to stay here. I'm very happy and proud to remain at this club for another year."
Modric made 35 appearances and scored 5 goals in La Liga in the 2020/2021 season; the most he has managed in a single campaign in both categories since arriving at the club.
