Coady's previous deal expired next summer but he has now secured his long-term future at Molineux.
The 24-year-old has been a regular under new boss Nuno Espirito Santo, who converted the former Huddersfield man to centre half and gave him the captain's armband at the start of the season in the absence of Danny Batth.
A delighted Coady today told the Express & Star: "I love being here, my family enjoy the fact I play for this football club and I'm hoping for a good few years.
"I wanted to commit to this club. There was no hesitation when we started talking and it's not taken long either.
"I came here wanting to do something and get out the league and I've not done it yet.The next four years are massive for me.
"It's a fantastic club filled with fantastic people. It's been easy to do, as soon as we started talking about it I wanted to do it.
"There's been a lot of change, I want to move forward with the club. Now it's sorted I'm the happiest man on the planet."
Just a few weeks ago Coady's future wasn't entirely clear when, despite him being in the Wolves XI, Sheffield United launched an audacious bid to buy the Liverpool-born player, which was swiftly rejected.
Coady said he didn't let the speculate have an impact on his performances.
"Sheffield United's a fantastic club, I've been there before (on loan), it's something their manager (Chris Wilder) came out and said and that was fine," Coady added.
"But it never affected me. I love working under Nuno, all his ideas I think are fantastic, he's galvanised the boys.
"I spoke to him about the situation and he was brilliant about it and helped keep my head down. It wasn't hard at all. This club means the world to me."
With his contract situation sorted Coady, who moved to Molineux two years ago, will now look to play a key role in what he hopes will be a season that ends with promotion to the Premier League.
"I feel the past two seasons, not just myself but the whole club, has been too inconsistent," he said.
"We've not been good enough. Something had to change. For myself individually it's just about getting better and help this club as much as I can."
Coady has become one of the senior figures in the squad but the modest defender said it was all about performances for him.
"I don't look at myself as something like that – I just want to help this team," he added. "The boys have been fantastic with me and if I can help by putting in some good performances that's all I want to do.
"It's a massive season for us but we've got some fantastic players in this team and we want to move forward."