The former Fulham, Tottenham Hotspur and Sunderland player came through the ranks of his current club and now looks set to see out his career there, which he said he is "delighted" to do.
"I had a big desire to go on with the club where I have been educated," Sky Sports News quotes Malbranque as saying. "I had the opportunity to extend and I am delighted to have done it.
"I met new coach Hubert Fournier whom I already knew, having played two years with him at Lyon when I was younger."
Malbranque left Lyon for the first time in 2001 before rejoining two years ago.