Wolverhampton-born Henry had two years remaining on his previous deal but has now committed himself to his hometown club until the summer of 2016. Manager Ståle Solbakken is delighted to see the 29-year-old extend his stay at Molineux, particularly in the wake of interest from elsewhere.
"There was interest from a couple of Premier League clubs in Karl so we are pleased that he is staying with us. He wanted to stay, we wanted him to stay, and it is good that the club have added another two years to his contract," Solbakken told the club's official website.
"The four-year deal also means that he will be eligible for a testimonial if he stays all the way through.
"I think it gives Karl stability but also gives the club stability and shows that to the players who are here and others we may sign. Karl is a good player and also an important player because he knows the culture of the club and the league we are in."
Henry arrived at Wolves in the summer of 2006, quickly being snapped up from Stoke for a compensation package after impressing on a trial. He has since made 218 appearances in his six years at the club, scoring seven goals, and captained the team for the best part of three seasons including a large part of the 2008/09 Championship-winning campaign.