The 22-year-old was a key member of the squad which reached the Championship playoff final last season, and head coach Steve McClaren believes that it could be the most important piece of business that the club does this summer.
"It's fantastic news for the football club that Jeff has signed a new long-term contract, and it is probably one of the best signings we will make this summer," McClaren told Derby's official website.
"When myself and the coaching staff were appointed last season we were aware that Jeff was a player with plenty of potential.
"He ended last season in very good form and made a real impact on the side, so we'll be looking for exactly the same from him at the start of the new season in August."
Hendrick scored five times in 35 appearances for Derby last season.