Henderson, who scored his first goal of this season in Saturday's 2-0 win over Ipswich Town, has put pen to paper on a new deal that will keep him at Vicarage Road until 2011.
"It's nice to finally put pen to paper. I am delighted and hopefully I can carry on where I left off on Saturday by scoring goals," he said.
"We've got nine points out of a possible 12, so at the moment we are in promotion form.
"All of the speculation is in the past now. I'm just looking forward to giving my all for Watford."Watford have handed
The Hornets rejected a £1.5million approach from Premier League side Fulham before Friday's transfer deadline and have now agreed improved terms with the 25-year-old forward.
Henderson, who scored his first goal of this season in Saturday's 2-0 win over Ipswich Town, has put pen to paper on a new deal that will keep him at Vicarage Road until 2011.
"It's nice to finally put pen to paper. I am delighted and hopefully I can carry on where I left off on Saturday by scoring goals," he told the club's official website.
"We've got nine points out of a possible 12, so at the moment we are in promotion form.
"All of the speculation is in the past now. I'm just looking forward to giving my all for Watford."