The 25-year-old, who has scored twice in three Serie A games this season, joined Palermo from Belgrano in his native Argentina in 2011.
"I love English football," Vazquez told Gazzetta dello Sport.
"The Premier League atmosphere is amazing, and I like English supporters. I would also love to play in the World Cup with Argentina's national team.
"I can only thank Giuseppe Iachini for showing faith in me. I have learnt a lot from him."
Vazquez spent the 2012-13 season on loan with Spanish side Rayo Vallecano, where he scored three goals in 18 appearances.