Miccoli to stay with Palermo
Miccoli, 30, committed his future to the Serie A club at a press conference arranged to allow him to outline his plans.
He said: "To receive an offer like this, despite having just had an operation on torn cruciate knee ligaments, was unexpected. I waited before talking because I wanted to evaluate it with my family. I have made up my mind to stay."
Miccoli, who scored 19 goals last season to lift Palermo into a battle for a UEFA Champions League place which they only lost on the final day to Sampdoria, claimed to have received a four-year contract offer from Birmingham, which could have been his last big opportunity for a lucrative deal.
"I am the captain and I sent the contract (from Birmingham) back because I want to stay here, in this team," he added. "I have done a lot to get back into Europe with Palermo and now I want to enjoy the Europa League in a Palermo shirt.
"This is the biggest decision of my career. My head was telling me to accept the offer, but my heart was telling me not to." Having resolved his future, Miccoli will now focus on making a full recovery from a serious knee injury.