The France international's previous contract was due to expire next summer and it was rumored Italian giant AC Milan was set to make a move for the center back.
However, Yanga-Mbiwa will now stay in France after an official statement was released by the club confirming his new deal.
"Montpellier and the club's board are very pleased to announce the contract extension of captain Mapou Yanga-Mbiwa.
"His deal was due to expire in June 2013, but the France international has chosen to continue the adventure here for a further two seasons. He is now linked to MHSC until June 2015."
Last summer the Rossoneri made an offer of up to six million euros for the 23-year-old, with Paillade president Louis Nicollin responding with a famously comical retort.
"Kojak never called me," he told Canal+ back in July.
"This makes me laugh. Those guys just got out of bed. They sold a guy for 45 million euros [Thiago Silva to Paris Saint-Germain] and they want to steal one of ours.
"If they offered 25 million or 30 million then fair enough, but from what I understood they merely come in with five million or six million. [Adriano Galliani should] go and watch movies and not hassle us."