Vazquez has been at Real Madrid for his entire senior career aside from a loan spell at Espanyol during the 2014-15 season.
The 25-year-old made his first-team debut in 2015 and is now fighting for a regular spot under head coach Zinedine Zidane.
The club see the winger as part of the future as an official statement via their official website has confirmed that a five-year contract is on the table.
The Spaniard will sign the fresh terms on Thursday before being presented to the media at the Bernabeu.
Vazquez joined Real’s youth setup from Ural in 2007.