The France international joined the Exiles from Bourgoin in the summer and has made a big impact at scrum time and in the loose.
"I am very happy to sign for the next two seasons with London Welsh," said Montanella, 30.
"I had other opportunities but I decided to stay as I share the same vision as head coach Lyn Jones - to secure the long-term future for London Welsh in the Premiership - and I am 100% focused on that goal.
"I love the club, the spirit and the supporters; there is a real family feel. Right now I am happy and proud to be a Dragon."
- Sports & Recreation
- London Welsh