The powerful number eight joined Sharks from Bourgoin in 2004, subsequently producing a succession of world-class displays and spearheading Sale's bid this season for Premiership and European Cup honours.
"'Seabass' has already become a legend at the club," said Sharks owner Brian Kennedy. "He is a real talisman and respected by everyone at the club."
Chabal, 28, made his debut for France against Scotland in 2000, and he has won 24 caps, featuring in victories over Australia and Tonga during the recent autumn Test series.
The 6ft 2in, 16st forward is already a leading candidate for Premiership player of the season, while his performances in Europe have put Sale firmly on course to secure European Cup quarter-final status from a tough qualifying pool which also includes Munster and Castres.
And with Chabal now committed to the club well beyond World Cup 2007, it is a huge boost to Kennedy and rugby director Philippe Saint-Andre in their quest to make Sale a dominant force in English and European rugby.