The 47-year-old had been linked with the managerial vacancy at Lyon after guiding Saint-Etienne to a fourth-place finish in the Ligue 1 table last season.
However, following talks between Galtier and the board, club director Roland Romeyer has announced that the coach will be staying at the Stade Geoffroy-Guichard.
"There were no worries," he told leprogres.fr. "We talked and Christophe will be with us next season."
Galtier joined Saint-Etienne in 2009 before guiding the team to success in the 2013 Coupe de la Ligue.