The French winger eventually decided to stay at Barcelona as he signs a new contract with the club until 2024.
Dembele was 20 years old when he joined Barca in the summer of 2017 from Borussia Dortmund, and made his debut on September 9 against Espanyol, contributing an assist to a 5-0 win. But despite his highly promising start, he never quite managed to get into his full stride due to an unfortunate string of different injuries.
In total the French winger has played 150 games in his five years at FC Barcelona. He has earned a fabulous reputation as an assist-provider, and in the 2021/22 season he topped not just Barca but also La Liga by setting up 13 goals.
The news will come as a significant blow to Chelsea, who were targeting the Frenchman this summer, to help bolster their options in attack.
The club and player had been discussing a new deal for months but they struggled to reach any common ground. As a result, his contract expired on June 30.
However, despite being a free agent, Dembele had little interest from other clubs and subsequently returned to the negotiating table with Barcelona.
Boss Xavi has always made wingers his absolute priority since taking over the club from Ronald Koeman last season.
He has fought for Dembele to stay when other voices at the club had wanted him gone.
He even insisted on picking him when there were those at the club who wanted him sidelined to force his hand over signing a new deal.
Transfer guru Fabrizio Romano confirmed on Twitter earlier today that the paperwork was done on a new two-year contract and that the Catalan giants are set to unveil the news later today.
His tweet read: 'Paperworks completed for Ousmane Dembélé: new contract signed until June 2024, official statement and unveiling with Barcelona scheduled later today.
'Xavi wanted both Dembele and Raphinha... he will end up with both Dembele and Raphinha.'