The 20-year-old has a deal until June 2016 at La Rosaleda, with the €21 million release clause inserted in his contract.
However, with top European clubs circling around the talented midfielder, the club chiefs are eager to persuade the player into signing a new and improved contract.
Marca reports that the club are prepared to offer the player a new deal until June 2018 worth €1.5 million per campaign.
That would almost quadruple his current salary of €400,000, while his release clause would be increased to €40 million.
This is much less than the interested clubs are prepared to offer Isco for his signature, but the good news is the player himself has no desire to leave Malaga just yet.
Isco has been in fine form ever since he joined los Boquerones from Valencia, scoring 7 goals in 40 La Liga appearances.