The former Fulham and Sunderland midfielder has extended his current deal at the Stade de Gerland to June 2014.
The 32-year-old retired from football in 2011 just a month after joining Lyon’s fierce rivals Saint-Etienne. However, the former Fulham and Sunderland midfielder, who started his career as a trainee with les Gones, returned to Stade de Gerland this summer.
Malbranque has quickly become an important figure in Remi Garde’s young team and is enjoying the role of elder statesman.
"I was very happy to come back to the Gerland," he told UEFA.com. "I came here with no special aim other than to bring some of my experience to the team regardless of where I play and to enjoy the season."
And his form since returning has not gone unnoticed, with club adviser Bernard Lacombe quick to praise his impact.
"It's as if he never left Lyon," he added. "His success is not a surprise to me. Steed gained a lot of experience in the Premier League. He has found his place in the dressing room and he expresses himself on the pitch. Physically, he is also impressive."