The 29-year-old, who joined the club in 2006, was stripped of the captaincy by former boss Mick McCarthy last season.
However, he has revealed that he is looking forward to the challenge of helping Wolves back into the Premier League.
"I think there was some interest from a couple of clubs in the Premier League but I was happy to commit my future to the club and I am fully committed to the cause," Henry told the club's official website.
"I already had two years remaining but am delighted to have extended my deal which takes me up to 10 years here and would make me eligible for a testimonial as well. I've been here a long time but I have to say the six years have flown by.
"I'm 29 now and I feel that I'm in my best years and hopefully I can do the business for the next four years. Last time we were in the Championship it was a very good year and hopefully we can have another one like that.
"It has been a tough three years in the Premier League and maybe not as enjoyable as we all hoped it was going to be. There were some great moments of course but it has also been a real battle to stay up and last year we fell short. It's a bit of a rebuild now but I'm happy to commit my future and be part of that rebuilding process."
Wolves begin their Championship campaign against Leeds United on Saturday.