The 21-year-old joined the Royal Blues in the winter transfer window on a six-month loan deal with an option to buy having falling out of favour at the Etihad Stadium. After a series of commanding displays for Schalke, the club have now confirmed that he has put pen to paper on a contract until 30 June 2019.
'Happy and proud'
"I'm happy and proud that I'm staying at Schalke," said the former ACF Fiorentina man. "From day one the team have welcomed me really well and I was a part of things straight away. I want to help us achieve our goals as a club in the future."
Nastasic has played in all seven of Schalke's Bundesliga games since joining the club in January and appeared in both legs of the UEFA Champions League last 16 against Real Madrid CF. He has made 15 appearances for the Serbian national team.