Claudio Ranieri signed the 18-year-old from Olympique Lyonnais during the close season on a three-year deal, and the striker's impressive start to life at the club has seen him rewarded with a two-year extension, with Monaco confirming the news on their official website.
Martial has made seven appearances for the club this season, scoring two goals, but has found opportunities limited given competition from Radamel Falcao and Emmanuel Riviere.
The striker suffered a sprained ankle during Monaco's defeat to Valenciennes in December and has been sidelined ever since. However, he is close to making a return to full fitness and was an unused substitute in their 2-0 win over Olympique de Marseille on Sunday.
With Falcao now a long-term absentee, Martial could see more first-team action as Ranieri looks to stay in touch with leaders Paris-Saint Germain in the race for the title.
Monaco sit second in Ligue 1, three points behind Laurent Blanc's charges and could have a chance to wipe out that deficit when the sides meet at the Stade Louis II in two weeks.