Use PostBackTrigger for the button and then check it out .:)
Example:
<asp:UpdatePanel ID="updatePanel1" runat="server">
<ContentTemplate>
<asp:Button ID="btnTest" runat="server" Text="Button" />
<asp:ModalPopupExtender ID="ModalPopupExtender1" runat="server" TargetControlID="btnTest" PopupControlID="Panel"></asp:ModalPopupExtender>
<asp:Panel ID="Panel" runat="server">
<h1>Hello World!</h1>
</asp:Panel>
</ContentTemplate>
<Triggers>
<asp:PostBackTrigger ControlID="btnTest"/>
</Triggers>
</asp:UpdatePanel>