Tavares, who joined the Sky Blues as an injury-replacement player in January, has signed a new contract until the end of the 2016-2017 A-League season.
"Sydney FC is a big club and I'm really happy to be staying with the Sky Blues," Tavares said.
"I want to win trophies with Sydney FC and I believe we can compete for titles in the A-League and Asian Champions League.
"I'm grateful to Arnie (coach Graham Arnold) and the club for showing faith in me and I already can't wait for next season to begin."
Tavares, 32, has impressed since joining Sydney, helping the club to the grand final where it lost 3-0 to Melbourne Victory.
"Mickael is a quality player and his attitude and application since he arrived in January have been fantastic," Arnold said.
"He has fitted seamlessly into our club and the quality he's shown on the pitch has left me in no doubt about his importance to the team.
"I'm looking forward to working with Mickael for the next two years as we take on Asia in the Champions League and look to build on our record-breaking 2014-2015 season."
Tavares brings vast experience to the club having played for the likes of Slavia Prague, Hamburg and Middlesbrough.
