Under his coaching, the All Blacks secured a 3-0 series whitewash of the Lions four years ago but were knocked out at the quarter-final stage of the 2007 World Cup.
"It is a real privilege to be asked to do this job and coach this team," said Henry, who previously coached Wales and Auckland.
"I've been doing it for a little while now and I've never thought of anything else, but it being a huge privilege to be able to do this job."
Henry's assistant coaches Wayne Smith and Steve Hansen have also been retained by the New Zealand Rugby Union, with the union's chairman Jock Hobbs determined to keep the trio together as the Kiwis prepare to host the world's premier tournament in two years' time.
"We think all three individually are very strong but as a coaching unit they are even stronger," explained Jack Hobbs.
"Holding all three was important. They have a formidable record and we hold them in very high regard.
"They are totally committed to New Zealand rugby and have become an important part of the wider organisation.
"It's a reflection that as a group we believe they are greater than the parts. We didn't want to run the risk of losing one of them through the course of the year which is always a possibility."
The All Blacks begin their Tri Nations campaign against Australia on Saturday, July 18 on the back of a disappointing 27-6 victory over Italy and a 1-1 series draw with France.