A junior-eligible player is allowed to play up to nine games in the NHL without costing the team a year of his entry-level contract. Monahan has six goals and three assists in his first nine games.
"We feel good about the decision we've made," general manager Jay Feaster said Wednesday. "We believe his development is best served with us. I think he's a unique individual ... in his determination. He's a 19-year-old going on 29 years old."
Calgary selected Monahan sixth overall in the June draft after he played three seasons with the OHL's Ottawa 67's. The Flames have not indicated whether Monahan would be released to play for Team Canada at the 2014 world junior championship.