The new deal will keep Doherty at the Molineux until the summer of 2014.
Doherty joined Wolves from Irish side Bohemians in July 2010 for £70,000 and has impressed for the Premier League side.
Wolves boss Mick McCarthy said: “Matt has just signed a new contract and I’m delighted with him.
“He was as good as anybody on the pitch last night at right-back.
“He was great and his use of the ball was as good as anybody’s. He reminds me a lot of Kevin Foley in the way he plays.
“He had another really solid and mature performance.”
Doherty said: “I guess it’s down to my agent to find a club to take me on loan! No one has come in for me yet.
“Maybe there was someone watching last night and I think the gaffer wants me to go out on loan now.
“I want to play every week so, if I could play in the Championship, I feel I would improve massively.”
