The highly-regarded central midfielder was reportedly the subject of a bid from Arsenal earlier this summer - an offer rejected by Lyon.
Reports have continually linked him with a move away from the French team, but Grenier has looked to quash speculation by committing his future to the club for another two years.
He said: "It was difficult for me to relax on holiday as things hadn't been settled. I found it tough to communicate.
"In my head, I knew I wanted to stay in Lyon and that it was my priority."
Lyon kick off their Champions League campaign later this month, after their third placed finish in Ligue 1 last term.
And Grenier wants to be firing on all cylinders when his side begin their qualification process, as they look to reach the competition's group stages.
"I needed to be psychologically and physically ready to start European competition," continued the Lyon star.
"This extension is good news for me personally. I've had six good months, but I'm not finished improving."
The new two-year extension ties him to the club until the summer of 2016. The 22-year-old midfielder made 24 starts for the club last season, scoring seven goals and providing nine assists.