"Mathieu Valbuena is happily alive and well contrary to what those despicable individuals are spreading on Twitter," the club said in their own Twitter retort.
The Ligue 1 club acted after after a number of social media posts claimed the 32-year-old died on Sunday, alongside a photograph of the player.
"Lyon are horrified at such disgraceful and inhuman acts," they said.
Valbuena is currently sidelined with injury.
Capped 52 times by France, the former Marseille man has endured a nightmare 2016.
The playmaker was left out of the France squad for the European Championship as his form suffered after he was targeted in a sex-tape blackmail affair which led to international colleague Karim Benzema being charged.
He was stretchered off in tears with a dislocated shoulder in Lyon's Ligue 1 defeat to Guingamp on October 24, five minutes after taking to the field.
Valbuena is just one of a number of sports and entertainment personalities to be targeted by false death reports. West Ham striker was falsely announced as dead on Twitter in August.