Henry's new deal is for four years and $50 million with $25.5 million guaranteed, Adam Schefter of ESPN reports.
Teams were given until Wednesday to sign multi-year deals with franchise-tagged players. It was reported Tuesday that Henry was unlikely to ink a new contract before the deadline.
Henry signed his $10.2-million tag in April, but both parties continued to negotiate and closed the agreement minutes before the deadline, according to NFL Network's Ian Rapoport.
His new contract ranks fifth in the NFL among running backs in average annual salary at $12.5 million, according to Spotrac. Houston Texans running back David Johnson is just ahead at $13 million per year.
Henry made his first career Pro Bowl last season after leading the NFL in carries, rushing yards, and rushing touchdowns. The 26-year-old was a vital piece of Tennessee's run to the AFC Championship Game, racking up 446 yards and two touchdowns in three playoff contests.
In 31 regular-season games since 2018, Henry amassed 2,599 rushing yards and 28 touchdowns, ranking second in the NFL in both categories. Just four running backs posted 500-plus carries over the last two seasons, and Henry is the only one to average at least 5 yards per attempt.
The 2015 Heisman Trophy winner was drafted in the second round in 2016 out of Alabama.