The successful coach has ended all speculation about his future by putting pen to paper on a new deal that will keep him at the Bundesliga side for two additional seasons
The Swiss trainer, whose previous deal was due to expire next year, had reportedly attracted the interest of Ligue 1 giants Olympique de Marseille, but Favre has now put to bed any speculation about his future by signing an extension with the Fohlen.
"I had been in talks with the board of directors for a while, and I'm pleased that we've now reached an agreement. I'm looking forward to the challenges ahead," Favre said upon signing his new deal.
The 54-year-old joined Monchengladbach in February 2011, and steered them away from the relegation zone in his first season, before guiding the club to fourth spot in the Bundesliga table in 2011-12.
Favre previously coached clubs such as Echallens, Yverdon Sports, Servette, Zurich and Hertha Berlin.