The 28-year-old's current deal still has two-and-a-half years to run but the club are keen for the centre-back to sign for a further two years until 2013.
The news should quell the recent transfer speculation surrounding the Brazilian, with Manchester City, Portsmouth, Fiorentina and Hamburg all reportedly interested.
The January transfer window saw the Benfica directors reject a €10million bid for the player and thanks to manager Quique Sanchez Flores' insistence, the club are close to sealing the deal.
Advanced stages"The subject is very advanced and I intend to fly to Portugual in a few days to close the negotiations," Luisao's agent Giuliano Bertolucci explained.
The club's sporting director and former player Manuel Rui Costa was delighted with the news: "Luisao has much love with this club and we desire to make the kid a symbol for Benfica."
The player himself was just as happy to be given the chance to win more silverware with the Lisbon club: "My dream now is to be Liga champions with Benfica and this is possible."