Propagation of extended Floquet-Bloch modes in the first three bands of a one-dimensional photonic lattice possessing a self-defocusing saturable nonlinearity is studied experimentally and numerically on the example of waveguide arrays in lithium niobate. Discrete modulation instability is observed in all bands in the region of anomalous diffraction, whereas modes propagate stable in the normal diffraction regime. © 2007 Optical Society of America.