Henson had been on a short-term contract with Toulon since February and it had been widely rumoured that disciplinary issues would ensure he would not be offered an extension to his current deal.
But the 29-year-old has stated that was not the case, claiming that discussions hit a stumbling block due to his desire to represent Wales again.
"Playing for Wales and in particular featuring in a Rugby World Cup... is my No. 1 priority," read a statement from Henson.
"I am disappointed that we weren't able to reach an agreement to enable me to play next season and beyond at Toulon, but for me the opportunity to try and prove myself for Wales is far too great to turn down.
"It is true that we had discussions with Toulon and were offered an extended deal at the end of this season for me to remain a Toulon player. However during their meeting it became apparent that Toulon has an issue with me playing for Wales, basically giving me an ultimatum that I play only for Toulon, something I felt unable to commit to."
The move leaves Henson without a club ahead of Wales' clash with the Barbarians next month.
The June 4 encounter in Cardiff will be the first time Henson has appeared for his country in just over two years and is now likely to act as a shop window for one of the game's most talked about players.