"We feel good about the decision we've made," general manager Jay Feaster said in making the announcement. "We believe his development is best served with us."
A junior-eligible player is allowed to play up to nine games without his NHL team burning a year of his entry-level contract. Monahan had six goals and nine points in his first nine games.
Calgary selected Monahan sixth overall in June's draft after he played three seasons with the OHL's Ottawa 67's. The centre has been given a heavy workload at even strength and on the power play by Flames coach Bob Hartley.
"I think he's a unique individual ... in his determination," Feaster said. "He's a 19-year-old going on 29 years old."
The Flames have not indicated whether Monahan would be released to play for Team Canada at the 2014 world junior championship, and said that decision would be made closer to the tournament.
Note to readers: This is a corrected story. A previous version had Monahan getting nine assists instead of points.