The 21-year-old, who scored 13 Ligue 1 goals for Les Gones while making five appearances for France last season, has put pen to paper on a new five-year deal.
The playmaker was heavily linked with a summer move to Premier League club Arsenal, who have been keeping tabs on his progress for a number of years.
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But he has instead opted to extend his stay at Lyon, with reports in France suggesting he has quadruped his salary.
"This was an easy decision for me to make," Fekir said on his new deal. "This is the club of my heart and I want to take it as high as possible."