The incident happened on Saturday while the Airbus A321-200 carrying 198 passengers was heading to the Portuguese capital.
A Lufthansa spokesperson said the crew immediately secured the battery in a protective bag specially designed for lithium batteries, and no-one was injured.
The pilot decided to divert to Lyon as a precaution, and the flight landed without incident.
Passengers resumed the flight on Sunday after an overnight stay in a hotel.
“The safety of our passengers and crews remains Lufthansa’s top priority at all times,” the company said..
The airline has banned the use and charging of external batteries on its aircraft since January, even though passengers are allowed to carry up to two in the cabin, subject to certain safety conditions.
