The 29-year-old had been linked with a move away from the Florence club amid uncertainty as to whether he would sign a new contract with Vincenzo Montella's side.
Valero has now extended his deal at Stadio Artemio Franchi until 2019 and said it was never his intention to leave the Serie A club.
"I am very happy to have extended with Fiorentina for another five years," Valero revealed to reporters at the club's pre-season training camp.
"The club have always given me so much and I have looked to give so much to them. A few months ago I told my agent not to listen to any other offers, I was waiting to receive one from Fiorentina.
"Fiorentina are a team that have given me the most together with Real Madrid. My family is happy in Florence and this is fundamental for me.
“Maybe I am a strange player. My life off the pitch is simple. Florence gives me tranquillity. Living here is a dream.
“Do I believe in the club's project? I arrived in Moena (two) years ago and we have grown each year.
"Could I then become a director at the club? I'm too young to think about that."
Valero's decision to sign a new deal is a further boost for Montella after defender Gonzalo Rodriguez also put pen to paper on a new contract.