Galtier, who started his coaching career at Marseille, replaced Alain Perrin as first-team manager of the French outfit in November 2009, and has led the club to four consecutive top-six finishes in Ligue 1.
The 50-year-old also led Saint-Etienne into the Europa League round of 32 this season, before their journey in the competition was ended by Manchester United.
"Leading Saint-Etienne for more than seven years has been an honour and a source of pride," Galtier told the club's official website. "I'd like to thank ASSE for allowing me to grow as a coach. I was able to identify with the club's value and their supporters."
Saint-Etienne, who have won the French league on 10 separate occasions, are currently sixth in Ligue 1 ahead of Sunday's home match with title-chasing Paris Saint-Germain.