The German club received an official enquiry from Blackburn on Tuesday outlining their interest in Raul, but the former Real Madrid star has decided that his immediate future is at Schalke.
“Our coach Ralf Rangnick, my fellow board member Peter Peters and I have always stressed that we don't want to sell him," said manager Horst Heldt.
“Raul told us he wants to stay at Schalke and asked us to reject the approach from Blackburn Rovers, which we've already done. We are delighted Raul will continue to contribute all he can to ensure the club's success."
Raul joined Schalke 04 in 2010 from Real Madrid, where he won three Champions League titles and became the Spanish club’s all-time leading goal scorer with 228 goals from 550 appearances.