The French midfielder's previous deal expired at the end of last month and there had been speculation he would leaveThe City Ground.
But Moussi has put pen to paper on a new agreement and is excited about the prospect of working for manager Steve McClaren.
He explained: "I spoke a lot to the other lads when I was in France and they told me a lot of positive things about the new manager.
"I already knew he was a good coach and I'm looking forward to working for him.
"I'm very happy now I'm back at Forest … now it's time to get down to work."
McClaren flew to the south of France to speak to Moussi face to face while contract negotiations were ongoing.
And the player added: "It was a good act of him to get a plane to France. It was something I appreciated and it made me happy."
Moussi reported back for training with The Reds today having spent the last three weeks working at a specialist camp in France.
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