The 23-year-old centre-back has been heavily linked with a host of different clubs, including Serie A giants AC Milan, after a series of scintillating performances for both club and country over the past 12 months.
Gunners boss Arsene Wenger has been credited with an interest in the highly-rated France international, and was reportedly considering an attempt to lure Yanga-Mbiwa to the Emirates Stadium in the January transfer window.
Newcastle United might have rivalled Arsenal for the in-demand defender's signature, with Yanga-Mbiwa's contract set to expire at the end of the current campaign. But, after extensive negotiations, Montpellier convinced their captain to sign a new two-year deal.
"Montpellier and the club's board are very pleased to announce the contract extension of captain Mapou Yanga-Mbiwa," read a statement on the Ligue 1 club's website.
"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."
Arsenal and Montpellier shook hands over the summer on a transfer that saw Olivier Giroud move to north London in a £12million deal, and Wenger will have no doubt hoped that the two parties' relationship might have put him at the front of the queue for Yanga-Mbiwa.
However, the Premier League outfit must now turn their attention to alternative targets in the New Year, after the announcement of his intentions to remain at Stade de la Mosson for the foreseeable future.