"We're delighted Leicester have agreed to let Max stay on and I'd like to thank Nigel Pearson for allowing him to do that," Leeds manager Simon Grayson told the Yorkshire club's official website.
"Max has done well for us. He has fitted in well, he has brought something different to the team and he was keen to stay on.
"We have him until the new year and with a very busy period coming up he will have a role to play here."
Gradel has made four league appearances from the substitutes' bench for Leeds since arriving on October 18 and made his first start for Grayson's side in the Johnstone's Paint Trophy victory over Grimsby this week.