The 18-year-old has signed a four-and-a-half year deal to tie him to Molineux until 2022.
Stafford-born Gibbs-White made his first team debut just over a year ago and has since made 11 appearances and also won the Under-17 World Cup with England, scoring in the final when they came from behind to beat Spain 5-2.
The youngster has been at Wolves since he was 10 years old and reportedly been attracting interest from Premier League clubs.
A delighted Gibbs-White said: “The club has done so much for me so it was only right for me to sign a new contract here and extend my Wolves career even longer.
"I’m happy that my future here is settled and I can now push forward."
It's been a whirlwind 12 months for the midfielder who will now look to establish himself in Nuno Espirito Santo's first team squad.
He's been a regular on the bench in recent weeks.
"The last year has been ridiculous, it’s gone so quickly," he said.
"I haven’t had the time to concentrate on anything other than football but I don’t mind that because I love the game.
"December and January have been busy months with the games that we’ve had so I’ve been concentrating on that and training more than anything else.
"I’m learning more and more things when I come into training every day and that’s helping my experience of the game to grow."
Gibbs-White is one of the leading lights to emerge from Wolves' much-vaunted Compton Park academy in recent years.
Sporting director Kevin Thelwell said he was proud of the player.
Thelwell added: "For a sporting director that’s been here for a long time, there can’t be a better situation than a boy coming in the building at eight years of age and then going all the way through the ranks of the academy, ending up playing for England, winning the World Cup, making his debut and playing in the first team at 17 years old.
"I'm proud of Morgan, his family, the academy and everybody involved in his development. We couldn’t have a prouder moment than for this to happen.
"In the short time that he’s been with the first team group, I think he’s proved that he’s more than capable of stepping up so I’d be very surprised if he didn’t make more appearances before the end of the season.
"He’s given himself a good shot of becoming a regular. He’s always had the potential, now he’s proving that he’s got the ability."
Wolves academy manger, Gareth Prosser added: "I’ve worked with Morgan for many years and I couldn’t be happier for him and his family.
"He’s worked extremely hard to get to this position and thoroughly deserves his new deal. It’s now up to him to continue to do all he can to become a regular in the first team."