The Saddlers announced last month that they had taken up the extension option in the 22-year-old's deal, after he joined the club last summer.
“I’m absolutely delighted to have extended my stay here,” Adebayo said.
"With the circumstances that have come at the end of the season, we were looking to carry on building where we came from after New Year when we thought we were heading in the right direction.
“I think we were going in the right direction so I am just happy to be part of this group again and hopefully we can go on and achieve more this season.
“It’s all about taking the next step now but I am delighted to have extended my stay with the club.”
Adebayo's first season was largely inconsistent, before he found impressive form in the weeks before football was suspended, netting three goals in his last two games.
Although the forward admits he found it 'frustrating' when football was halted, the former Fulham man is now focused on what he believes will be a fruitful 2020/21 campaign.
“I would have loved to have carried on going the way I was going before lockdown kicked in,” he added.
“I was a bit frustrated at the time but we can’t dwell on the past and we have got to move forward and just be ready for when the season starts again.
“It’s just about bouncing back. You’re always going to have little setbacks but it’s the bouncing back that counts.
“It was tough at the start and I did think about it a lot. I now know that the focus is on what’s to come. I’ve got time now to go and put things right and show what my standard is and carry on where I left off.
“I think having a settled group will be massive next season because we now know the strengths and weaknesses of everyone.
“It took us a bit of time last season to figure those out at the start of the season and we showed that after we have had time together when training and playing, we start to know what peoples strengths are and where we can use that to hurt other teams.
“I think that keeping the core team together is another step in the right direction to carry on building relationships all over the pitch.
“I feel like the group has settled and everyone gets on with each other and we are a very tight knit group so it’s just about using that for next season and using it to our advantage.”