The France international's previous contract was due to expire next summer and it was rumoured Italian giants AC Milan were set to make a move for the centre-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 €6 million 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 €25m or €30m then fair enough, but from what I understood they merely come in with €5m or €6m. [Adriano Galliani should] go and watch movies and not hassle us."