It was reported last week Sellars, who has been at the club since 2014, was set for the Molineux exit door.
The former coach and head of academy was promoted to role of technical director in January 2021.
Sellars, 56, had become the focus of fans' anger regarding Wolves' very poor start to the Premier League campaign, which sees them bottom near the midway point of the top flight season while action is paused for the World Cup.
Executive chairman Jeff Shi said: “Scott has been a big influence at Wolves in my time at the club, and you can see from his elevation through different departments and roles how highly we think of him.
“A football person through and through, with exceptional experience in the game as a player and a coach, Scott brought that with him to work every day and used it to improve the next generation of young footballers.
“On behalf of everyone at the club I would like to say thank you to Scott, and wish him the very best of luck for the future.”
In an Express & Star poll last week asking who was most to blame for the shocking start to the season, 45 per cent said former head coach Bruno Lage, 35 per cent voted executive chairman Shi and 20 per cent said Sellars.
Ire grew in the direction of the ex-Bolton and Newcastle midfielder in the home defeat to Leicester. Fans chanted for Sellars' exit, while claims that he was influencing tactics, team selection and substitutions were rejected by caretaker boss Steve Davis.