The former Barca midfielder, who took over as coach in 2021, will extend his contract by one season until 2025.
Xavi led the club to their first LaLiga title since 2019 and the Spanish Super Cup last season.
"We arrived at a difficult time, in unfavourable circumstances," Xavi told a press conference ahead of Saturday's game against Celta Vigo.
"Last year we won two important titles. We're in a process of transition."
Xavi said Barca had just achieved "their two best matches" since he took over, with 5-0 wins against both Real Betis in La Liga and Royal Antwerp in the Champions League group stage.
Xavi took over from Ronald Koeman (60), two years after his retirement as a player, on a contract until June 2024.
Barcelona are currently second in LaLiga, two points behind Real Madrid.