Monaco said on their website that the 33-year-old left back, who began his professional career with them in 2000, was returning after 13 years with Lille, Olympique Lyon and Barcelona.
Abidal said an emotional farewell to Barcelona last month after the Spanish club decided not to renew his contract.
The defender, who won 61 caps for his country and played in the 2006 and 2010 World Cups, had fought his way back into the squad after having a liver transplant last year.
Monaco are bankrolled by Russian billionaire Dmitry Rybolovlev and have been active in the transfer market since winning promotion to Ligue 1 at the end of last season.
Their signings include Colombian striker Radamel Falcao from Atletico Madrid for a transfer fee that media reports said was in excess of 50 million euros.
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