The 28-year-old has penned a two-and-a-half year contract to tie him to Molineux until 2021.
Bennett has started all but one of Wolves' Premier League matches this season and put in a string of excellent performances.
Wolves sporting director Kevin Thelwell said: "Ryan has been a great addition to the squad since he arrived at Wolves last summer and we are delighted to offer him this new deal.
“He has had a huge impact on the club and we are thrilled that he has been able to take to replicate his performances in the Championship last season into the Premier League.
“He is an incredibly consistent performer and you can always guarantee him to give 100 per cent in everything he does.
“Ryan’s commitment to the club, together with his professional attitude both on and off the pitch has made him a very popular member of the Wolves family.”