The 21-year-old full-back, who can play on either flank, will remain at the Swiss Super League club until the end of the 2016/17 season.
Mbabu joined United back in January 2013 from Servette but had to wait until September 2015 for his debut, as a substitute against Sheffield Wednesday in the League Cup.
His Premier League bow followed three days later when he starred in a 2-2 draw with Chelsea at St. James’ Park.
To date, the defender has made five appearances for Newcastle and signed a two-year contract extension earlier this summer.